cio straight talk issue 1
DESCRIPTION
A practitioner lead thought leadership publication, For CIOs From CIOsTRANSCRIPT
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CIO
HCL Technologies and Unstructure™ launch Straight Talk, a platform for peer-to-peer exchange of practical ideas on a variety of topics and for a variety of audiences — including CIOs. If you’d like to share your thoughts, there are three ways to join the conversation: subsequent issues of Straight Talk publications; a Straight Talk Web site and discussion forum; and in-person Straight Talk events in your geography. The online forum will help maintain continuity in conversations across all three mediums.
Visit the online forum at www.unstructure.org/straighttalk
Write us with questions or suggestions at [email protected]
ARE YOU A “REINCARNATE CIO”?If not, how do you achieve thisenlightened state?
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DISPATCHES FROM THE FRONT LINESExperience-based insights about current CIO challenges.
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WHAT LIES AHEAD?Maryfran Johnson, Jeanne W. Ross and Ellen Kitzis on looming CIO challenges.
PAGE 72 Issue Number 1
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Issue Number 1
From the CEO's Desk: Leading Across Boundries Vineet Nayar
Editors’ Note: Continuing the Conversation
Are You a “Reincarnate CIO?” Evolution of the CIO's Role; “Employees First” and the CIO; Snapshots of Reincarnate CIOs
Straight Talking: Dispatches from the Front Lines
Generating Value For Internal Business Operations
Many Brands, One System Virginia Guthrie, Chief Information Officer, Dr Pepper Snapple Group Inc.
Case Studies: Optimizing Business Services KLA-Tencor Corp., UTC Fire & Security, and 3M Co.
Measuring and Maximizing the ROI of ERP Glyn Evans, Corporate Director of Business Change, Birmingham City Council
Case Study: Achieving Sweeping Business Transformation Fonterra Co-operative Group Limited
Generating Value For Customers
Building “One AEGON” Kees Smaling, Chief Information Officer, AEGON N.V.
Case Study: Getting IT Right the First Time British Telecom Group P.L.C.
Life After a Crisis: Lessons for IT Jeff Carlson, Chief Information Officer, SunAmercia Financial Group (AIG)
Generating Value Through Innovation
Leading by Example David Evans, VP, Information Technology, Quest Diagnostics Inc.
Case Study: Achieving Fleet and Field-Force Optimization Australian subsidiary of Veolia Environnement S.A.
Going Mobile in Wiltshire Assistant Chief Constable Patrick Geenty, Wiltshire Police Force
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ContentsGenerating Value By Effective Collaboration & Planning
Changing Contracts on the Fly Rob Hornby, Chief Information Officer, Wealth Management Group, Old Mutual P.L.C.
Case Study: In Search of Agility and Savings Dixons Retail P.L.C. (previously DSG International)
Getting Ahead by Getting Along Chuck Ciali, Chief Information Officer, Teradyne Corp.
Creating the IT Blueprint Bruce Carver, Chief Information Officer, Cummins Inc.
CIOs @ HCL: How to Pitch Your Transformation Plan Kris Hillstrand, Satish Chandrasekaran, Greg Black and Raymond Siebert, HCL Technologies
Solution SpotlightUsing the iPad to Boost Sales Productivity A sales order tracking tool currently being built on the iPad platform
A Systematic Approach to Developing Your Cloud Strategy Deciding which business tasks and applications should move to which types of clouds
What Lies Ahead? Three Outside Perspectives on Tomorrow's CIO Maryfran Johnson (CIO Magazine), Jeanne W. Ross (MIT Center for Information Systems Research),
Ellen Kitzis (Gartner)
Appendix: 15 Questions A Checklist of Things to Consider as You Begin Your Annual IT Planning
Pullout Poster: “Envisioning Our Cloud Strategy”
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Editorial TeamPaul Hemp, Anirban Sanyal, Jayabrata Nag, Sameer Chandiramani, Joel Kurtzman (Kurtzman Group), Glenn Rifkin (KG), Fred Eliason (KG), Claire Meirowitz (KG)
Design TeamMukund Arora, Amy Detrick (KG)
Editorial Advisory BoardShami Khorana, Krishnan Chatterjee, Dharmender Kapoor, Rupak Rathore
Circulation/DistributionLaurance Allen
AcknowledgmentsWhile it isn’t possible to name everyone who has contributed to CIO Straight Talk, the following are particularly worth mention:
All HCL senior sales leaders; the entire Cost-Out Idea Owners team; Abhay Chaturvedi, Amitabh Dasgupta, Ajay Nair, Anand Narayanaswamy, Ankit Kumar Duggal, Aravind Venkataramanaiah, Chandraraj Ramachandran, Franck Henri Jean Ridon, Gaurav Sharma, Gowri V Shankar, Harsha Rao, Kunal Purohit, Neha Chopra, Ninad Kamlesh Parikh, Raj Singh, Rakesh Raman, Robert DeSouza, Robert MacDougall, Sandeep Malik, Srivathsan Sridharan, Sudhanshu Gupta, Sudip Lahiri, P
Sunilkumar, Vijayakumar, Vinod Sathrukhnan.
For information on reprinting articles and all other correspondence, please e-mail [email protected] or contact the editorial team at:
Paul HempHCL America, Inc.400 Crown Colony Dr.2nd Floor, Suite 203Quincy, Mass. 02169United StatesTel: +1-408-328-7501
CIO Straight Talk is a periodical published by HCL Technologies for its clients and friends. The contents are copyright © 2010 by HCL Technologies Ltd. All rights reserved. Excerpts may be reprinted with attribution to HCL Technologies.
Articles can be found at our soon-to-be-revamped website: www.unstructure.org/straighttalk.
Anirban SanyalHCL Technologies2nd floor, A-9, Sector - 3Noida - 201 301, Uttar Pradesh IndiaTel:+91-120-4069000
Chris Barendregt CIO Fonterra Cooperative Group
Greg Black Former CIO American Safety Insurance (currently with HCL Technologies)
Ronald Blahnik VP/IT Engineering Lowe's Co.
Scott Bonneau VP/IT, Service Management
Dr Pepper Snapple Group
Jeff Carlson CIO Sun America Financial Group (AIG)
Bruce Carver CIO Cummins Inc.
Satish Chandrasekaran Former VP/IT Target Corporation India (currently with HCL Technologies)
Chuck Ciali CIO Teradyne Inc.
Dean Del Vecchio CIO, CAO Dow Jones & Co.
David Evans VP/IT Quest Diagnostics Inc.
Glyn Evans Corp. Director, Business Change
Birmingham City Council
Patrick Geenty Assistant Chief Constable
Wiltshire Police Force
Tim Graumann VP/IT and CIO Brocade Communications Systems Inc.
Phil Gray CIO/Australia Veolia Environnemental S.A.
Mike Green Operations Manager 3M Company
Virginia Guthrie CIO Dr Pepper Snapple Group Inc.
Rob Harris SVP/IS U.S. Foodservice
Kris Hillstrand Former CIO Energy Future Holdings (currently with HCL AXON)
Rob Hornby CIO Wealth Management Group, Old Mutual P.L.C.
Maryfran Johnson Editor in Chief CIO Magazine
Paul Johnson EVP, CIO BB&T
Ellen Kitzis Former Group VP Gartner; co-author, "The New CIO Leader"
Dan Lambert VP/Service Integration British Telecom P.L.C.
Deb Hall Lefevre VP/IT Enterprise McDonald's Corp.
Tim Marks Customer Service & Business Process Mgr.
3M Company
Albert Perruzza SVP, Global Ops, IT & Business Redesign
The Reader's Digest Association
Martin Racioppi Head, PMO & IT Service Sourcing
Pearson P.L.C.
Jeanne W. Ross Director MIT Center for Information Systems Research
Kees Smaling CIO AEGON N.V.
Raymond Siebert Former VP and CAO; Sr. VP/Corporate Operations
Zurich North America Insurance Co. (currently with HCL Technologies)
William T. VanCuren CIO NCR Corp.
Walter White CAO Allianz Life Insurance Co.with orat
We thank those who agreed to be interviewed and share their insights and experiences, as well as those who allowed us to feature their companies in case studies.
Vineet Nayar
Stop for a moment and look 10 years into the future. What do you see?
Over the next decade, business will face daunting challenges: Emerging markets characterized by rapid growth but products selling at a fraction of their developed-economy prices. Countries with aging workforces trying to leverage the entrepreneurial energy of younger labor pools in places like China and India. Sustainability issues that bedevil not just business but all of society. These will be overtaken by new issues, just as we’re learning to deal with the old ones.
What will spark the innovation needed to address these cascading challenges? The promise of great personal wealth from a successful startup? Increased government funding of R&D? I believe the answer lies in a new kind of organization.
Fostering Collaborative ThinkingCertainly, today’s business organization, with its hierarchical pyramid and well-oiled but inflexible systems, isn’t equipped to tackle tomorrow’s challenges. We need organizations in which trust, based on transparency, creates a culture of constant innovation; in which managers are as accountable to their employees as employees are to their bosses; in which responsibility for change is pushed down the ranks to young workers. Organizations that put their “employees first” to drive innovation at the bottom of the pyramid.
This approach can deliver strong business results as well as solve sweeping global or industry challenges. Over the past five years, HCL’s experiments in this area have contributed to growth that has outpaced others, including 20 percent year-over-year growth during the depths of the economic downturn.
The dismantling of the traditional hierarchy leads to strong business results because it frees up possibilities for collaborative thinking, the kind needed to find solutions to problems made increasingly complex by an ever-accelerating explosion of information. Instead of a few individuals with all the answers holding leadership positions,
many different people — depending on the situation and their individual talents — step forward to lead efforts to solve problems. Though not always in leadership roles, everyone is always prepared to lead. As for the traditional leader at the top: He or she is left with the job, a crucial one, of enabling and encouraging new leaders at every level.
Sometimes those who step forward to lead are people who aren’t even in your own organization — your customers, for example. Some of the most innovative solutions, after all, come from give-and-take between a company and the people it serves. Other answers emerge from collaboration among peers at different, even competing, companies.
Practical “Thought Leadership”Which brings us to CIO Straight Talk, a publication that is, at its heart, “for CIOs from CIOs.” That is,
We need organizations in which trust, based on transparency, creates a culture of constant innovation.
most of the voices you’ll hear in this issue are not those of “experts” — even our own experts at HCL — but of your peers: CIOs and other IT executives. The publication’s aim is to facilitate a conversation among CIOs about their experiences battling it out in the trenches — a conversation that taps their collective expertise and insights.
Think of it as crowdsourcing for IT professionals.
We do offer some of our own points of view in CIO Straight Talk (and even, at the end of this issue, the opinions of a few outside experts), but these insights are drawn from our work with clients. The lead article of the issue, “Are You a Reincarnate CIO?,” reflects our belief that CIOs
have a transformational role to play in their organizations and that to play this role they may need to be transformed themselves. It’s something we’re increasingly hearing from our customers — and they’re increasingly hearing from each other.
This publication is an attempt to capture and share with you some of the practical insights that emerge from this kind of dialogue across company boundaries, one in which individuals will take the lead in offering their ideas and then step back to listen to others’. It’s a dialogue that will continue long after you put down this issue of CIO Straight Talk, in both a Straight Talk online discussion forum (at http://unstructure.org/groups/straighttalk) and in Straight Talk events around the world.
We hope you will join us in the conversation — one that will help us all face the challenges of the next decade. //
Leading Across Boundaries
From the CEO's Desk
7From the CEO's Desk: Leading Across Boundaries //6 // CIO Straight Talk
Vineet NayarCEO, HCL Technologies
Editors’ Note: Continuing the Conversation
The idea driving CIO Straight Talk is that IT professionals can learn as much, if not more, from their peers than from “full-time experts” – consultants, academics, analysts, management gurus. After all, professionals who face similar challenges in similar situations are likely to have especially relevant and practical insights that others can benefit from – insights that simply wouldn’t occur to outsiders, however smart and however broad their perspective on an industry or profession.
And many of the best practitioner insights burst into consciousness during candid and honest conversation. The interplay of ideas and the friction of debate create the spark of a new idea. CIO Straight Talk is an initial and still-evolving effort to begin such a conversation in printed form. We hope you will respond to the ideas of your peers in these pages and that your thoughts will serve as starting points for articles in an upcoming issue.
A Movable Forum
But that conversation will continue in other forms after you put down this publication. (Some of you may in fact be reading an iPad, Kindle or Nook version of CIO Straight Talk, which will be available at the end of 2010. Others may be reading one of our translated editions, scheduled to appear in January.)
Another conversational venue will be an online CIO Straight Talk forum, in which CIOs and other IT executives will be able to raise problems, debate issues, and air their views. The forum will have its home on the website www.unstructure.org, an online platform for contemporary thought leaders, bloggers and professionals. Although the site was developed and is maintained by HCL, it is driven by participants eager to discuss the important management issues of the day – especially those that raise questions about the management status quo.
CIO Blogs, Breakfast Debates
The CIO Straight Talk site (www.unstructure.org/straighttalk) will also offer an online version of the print publication; and individual home pages where a CIO will be able to upload a profile, host a blog and begin discussion threads.
There also will be the opportunity for conversation among CIOs at CIO Straight Talk live events, which will be held periodically in locations around the world. Whether breakfasts featuring a single speaker or after-work panel discussions, these events will be informed by the same spirit of inquiry and peer-to-peer idea sharing. We hope you’ll join us for one of these gatherings.
We also hope you'll share your thoughts on how we can improve CIO Straight Talk – whatever form it takes. Send your suggetions, your responses to articles in this issue and your ideas for articles or case studies in future issues to [email protected].
The Editors
8 // CIO Straight Talk
Are You a Reincarnate CIO?As the IT landscape becomes transformed almost
beyond recognition and as CIOs are called upon
to transform their companies, they may find that
they also need to transform themselves — be “born
again,” reincarnated in a new form with a new role
and a new way of thinking. A number of CIOs offer
their thoughts on what a Reincarnate CIO looks like
and how the change takes place.
// CIO Straight Talk 11Are You a "Reincarnate CIO"? //10
CIOs are being asked by their CEOs to help develop new offerings for customers. That means the “I” in CIO now stands for innovation, not information.
Ronald Blahnik, VP/IT Engineering, Lowe’s Co.
The CIO must be viewed throughout the organization as a trusted business partner and leader.
Dean Del Vecchio, CIO and CAO/Corporate, Dow Jones & Co.
For IT to drive business transformation, an IT leader must couple a CEO-like grasp of emerging business strategies within his or her industry with CTO-like understanding of emerging technologies outside of that industry.
Walter White, CAO, Allianz Life Insurance Co.
These are the kind of candid comments we hear as we talk to
CIOs and other IT executives about the challenges they face these
days. You yourself may have voiced similar thoughts to a colleague or
business partner.
Are You a Reincarnate CIO?
The EnvironmentApplications Portfolio Transaction processing from order through delivery
Executive Attitudes IT for cost displacement and automation; from enthusiasm to cost consciouness
'60s-'70s
The CIORole Operational manager of specialist function
Tasks On-time delivery; reliable operations
The Various Incarnations of the CIO
A new set of skills – and mindset – may be needed to succeed in the evolving CIO role.
Mainframe Era
Photo by SuperStock/Getty Images.
12 // CIO Straight Talk 13Are You a "Reincarnate CIO"? //
In the leap from CIO to CEO of Progressive Corporation, Glenn M. Renwick has overseen impressive growth since taking over the top spot at the highly rated automotive insurance provider in 2001. Under Renwick, Progressive has increased revenues from $6 billion to $15 billion. But more important, Progressive has maintained its reputation as one of the top auto insurers in the nation and a dominant Internet player in the auto insurance marketplace. As CIO from 1998 to 2000, the native New Zealander drove Progressive online well before other insurance providers understood the power of the medium. Progressive.com was the first to offer comparison insurance quotes online, and today it continues to find innovative ways to lure customers to its website with such options as Name Your Price, an opportunity to build an insurance plan around a price the consumer suggests. In addition, customers can file claims online and follow their claims with online claims reporting and tracking. Progressive.com has been rated the best website for buying and owning car insurance by Keynote Systems, Inc. every year but one since 2000. With his CIO background, Renwick was able to envision the competitive advantage that technology offered early on, and under his leadership, Progressive has woven technology into the fabric of the corporation. //
Such statements highlight an all-too-real risk
facing IT professionals, especially those who see
their job as mainly involving technology. Many say
privately that, no matter how successful they have
have been in the past, they fear becoming stuck in an
organizational backwater, marginalized within their
own company.
Call this straight talk from CIOs – in this case,
about the transformation of their role.
* * *
The idea of expanded CIO responsibilities isn’t
new, of course. That the IT leader is well-positioned
to help define and develop business strategy, rather
than simply enable it, has been discussed for a decade
or more.
But as we emerge from the downturn facing
the prospect of a sustained period of relatively low
growth, pressure on the CIO to perform more
than the position’s traditional tasks will continue to
increase. Keeping the IT systems up and running,
reducing IT costs, improving operational efficiency
– delivering these will be just table stakes for anyone
seeking to build a successful career. “The current
economic climate and increased business expectations
for technology have certainly added complexity to
the CIO’s role,” says Scott Bonneau, VP/IT, Service
Management, at beverage company Dr Pepper
Snapple Group.
As we make the transition to an era of cloud
computing, these operational roles become even
less relevant. Increasingly, CIOs will be expected to
champion initiatives that spur top-line growth, build
market share, generate new products and services,
even transform a company’s business model.
None of this comes as much of a surprise to most
CIOs. After all, information technology in many ways
drives business strategy today, with countless products
and services and nearly every business transformation
reliant on IT in some way.
In a recent survey of 230 business executives at
global organizations in numerous industries, co-
sponsored by HCL Technologies and Knowledge@
Wharton, two-thirds of the respondents, representing
Distributed Era'80s
The EnvironmentApplications Portfolio Knowledge worker support; interorganizational systems; process reengineering; ERP systems
Executive Attitudes Increased involvement in IT issues and governance; polarization of attitudes: IT as strategic asset or cost to be minimized
The CIORole Executive team member; organizational designer; strategic partner; technology architect; informed buyer
Tasks Manage "federal" IT organization; recruit and develop staff; educate line management; align IT with business; design corporate architecture; scan technologies; stabilize and standardize infrastucture; scan services market; develop alliances with key vendors
Glenn M. Renwick, CEO, Progressive CorporationSnapshot of a Reincarnate CIO
Photo by Tim Brown/Stone/Getty Images.
14 // CIO Straight Talk 15Are You a "Reincarnate CIO"? //
a variety of functions, said they view the CIO
as a business leader and innovator. Just as many
respondents said that their organization sees the IT
function as a “strategic driver for transforming the
business” as said that IT only plays its traditional role
as an “enabler for running the business.”
And yet despite all the talk about CIOs getting a
seat at the strategy table, most have been offered only
the occasional folding chair. So what stands in the
way of IT expanding beyond its traditional support
function?
Some of the barriers are external: the longstanding
relegation of IT to an organizational ghetto where
people aren’t exposed to business issues, for example,
or mistrust among senior executives who’ve been
burned by too many failed or underperforming IT
projects.
But barriers to assuming an expanded role also
exist within the individual. Removing these barriers
may require a kind of metamorphosis, a fundamental
change in how you view your capabilities and
responsibilities. Is it time to be “born again” into a
more enlightened and evolved professional state?
Is it time to become a “reincarnate CIO”?
What Is a Reincarnate CIO?We use this somewhat unusual term in an effort to
capture – and draw attention to – the nature of the
professional transformation that CIOs tell us is now
required to meet the demands of the future.
In numerous Eastern spiritual traditions,
reincarnation is a process by which an individual’s
identity, capabilities, knowledge, feelings and mind
move through time in various forms, all the while
enhancing their perceptive and creative powers, their
understanding and ability.
Whereas spiritual reincarnation involves multiple
lives, in today’s world of intense change, a CIO can
live the equivalent of multiple lives in a single career
in a single lifetime. Still, the transformation involved
in becoming a reincarnate CIO doesn’t happen
overnight; it’s a journey, both for the CIO and for his
or her organization.
Although the notion of the reincarnate CIO more
reflects a state of mind than a list of defining traits, let
us sketch out a profile for this evolved professional. A
reincarnate CIO:
Focuses more on business than on technology, • more on strategy than on operations.
Without abandoning the traditional tasks of • controlling IT costs and increasing operational
efficiency, views IT primarily as a driver of greater
business innovation (through better alignment of
IT with business strategy) and business impact
(through IT-enabled transformational change).
Is as accountable to the CEO and business unit • heads, who set strategy, as to the COO and CFO,
who oversee operations and the cost of running
them.
Serves as a change agent within the organization • by emphasizing communication and transparency
and using negotiating skills gained over the
years while building numerous outsourcing
partner relationships.
Develops capabilities that open up a career path • extending beyond the IT function.
Of course, information technology – and the people
who manage it – have always had the potential to
redefine or even create businesses. Think of the way
that IT shaped the revolutionary business models
of companies as different as FedEx, Dell, eBay and
Facebook.
But over the years, and especially during
economic downturns like the one we’re emerging
from, circumstances and perceptions generally have
boxed in CIOs as cost controllers, first; business
enablers, second; and strategic business thinkers, a
distant third.
In the post-recession world of 2011 – with its
slower growth, heightened competition, and the
emergence of potentially game-changing technologies
like cloud computing – the CIO may find herself
called upon to perform all three tasks, and in reverse
order of priority.
This requires both a granular understanding of
specific business operations and an appreciation of
the strategic needs of the company as a whole. “The
biggest challenge for IT leaders is to rise above the
chaos of multiple vertical functions and to provide
a consistent companywide platform for agility,”
says William T. VanCuren, CIO at NCR, a global
business technology company. “This platform must
be accessible via multiple channels, such as mobile,
kiosk, Internet and voice technologies.”
In fact, in today’s business world, even more may
be required; cutting costs, improving operational
efficiency, and ensuring that your IT strategy is in
sync with your company’s business strategy may
Snapshot of a Reincarnate CIO
Dawn Lepore, CEO, Drugstore.com
When Dawn Lepore became CIO at Charles Schwab & Co. in 1993 at age 39, she was the rare woman technology leader. In fact, she may well have been the only woman CIO at a major company at the time, and she knew she would be challenged. To make things more difficult, she did not have a computer science degree or an MBA. She was, in fact, a music major, which made her a target for naysayers who didn’t believe she was qualified for such a technology-centric position. But she had some traits that served her well as CIO and eventually helped elevate her to a CEO’s position. She told The New York Times, “The reason I got (the CIO) job was that I took on really tough assignments, things nobody wanted, things that people thought were kind of impossible or thankless tasks. So I proved that I could take on things I didn’t know, and learn ... And I was good at building relationships across the company.” Under Lepore, Charles Schwab began online stock trading in 1996, a pioneering move that changed the industry. Lepore served as Schwab’s vice chairman and CIO for 11 years before joining Drugstore.com as CEO in 2004. Ironically, Lepore isn’t the first former CIO to lead Drugstore.com. Her predecessor, Kal Raman, was the company’s CIO and COO before taking over the top spot. //
And yet despite all the talk about CIOs getting a seat at the strategy table, most have been offered
only the occasional folding chair.
not be enough. “A transformation is a fundamental
change in the way a business operates, whether
that be a new market or a new operating model,”
says Tim Graumann, VP/Information Technology
and CIO at Brocade Communications Systems, a
provider of data center networking solutions. “And
successful businesses are in a permanent state of
transformation.” IT, he says, has to be a fundamental
enabler of such transformation and the subsequent
business advantage it creates.
16 // CIO Straight Talk 17Are You a "Reincarnate CIO"? //
How Do You Become a Reincarnate CIO?Talk to enlightened CIOs about how they have
evolved professionally, in order to keep up with
their evolving role, and they’ll point to a number of
important factors to consider.
Reset your thinking. As we mentioned above,
becoming a business transformer may well require a
personal transformation. An obvious starting point is
to get savvy about your business and your industry
in general.
“To focus and enable transformational-type
change requires a deep understanding of business
opportunities, as well as excellent execution abilities,”
says Paul Johnson, EVP and CIO of BB&T, a
regional U.S. bank.
Some CIOs point out that a typical IT mindset
can trap IT executives in techno-centric thinking —
a view of the world that doesn’t encourage support
from corporate leadership.
It doesn’t matter whether such a mindset is
because of hard-wired differences — IT attracts
people who are inherently analytical and rational,
business attracts people who are intuitive and
impulsive — or simply because technology is all that
IT people are typically exposed to in their segregated
corner of the corporation. Whatever the reasons,
today’s CIOs are increasingly discussing the need to
broaden their horizons.
Keep in mind that, in the role of what we’re
calling the Reincarnate CIO, technology won’t in
fact be CIOs’ primary job. They must understand
technology, but they don’t need to be technologically
adept. What CIOs must do is think about the future
and position their IT efforts so that the company is
headed in the right direction.
Align IT strategy with business strategy. There’s an interesting litmus test of a CIO’s business
orientation: Ask him who his customers are. Ask
yourself. If you immediately think of the guys in
Procurement who are always calling about glitches in
the new ERP system, you fail the test, according to a
growing number of CIOs.
An overwhelming 70 percent of respondents in
the HCL-Knowledge@Wharton survey said that
IT alignment with business plans was the most
important factor in helping IT play a strategic role.
And in order to adopt this business focus, it’s
worth expanding your definition of “customer”
beyond your internal customers to the end users
of your company’s product or service — that is,
your customer’s customers. How can IT enhance
their experience, as well as the experience of that
demanding customer segment in Procurement?
Remember that end users very often drive the
innovation that IT can enable. For example, the
profound generational shifts in the use of technology
— most young people don’t have landline phones,
prefer texting to calling, and don’t e-mail — will
require companies in almost every industry to change
the way they do business.
Consider recent customer initiatives at home
improvement retailer Lowe’s. During the economic
downturn, rather than focusing exclusively on costs,
Lowe’s was thinking about the customer experience,
according to Ron Blahnik, the company’s VP/IT
Engineering. With the top two players in the home
retail industry (Home Depot and Lowe's) accounting
for just 28 percent of the $450 billion market, there
is a lot of room to grow if the company can figure out
ways to engage customers and deepen the company’s
relationship with them.
But, Blahnik notes, most Lowe's stores were
designed for Baby Boomers; the Millennial generation
behaves differently. They research the pros and cons
of products before they come into the store. Once
there, they’re linked with friends, texting. Lowe’s
knew it had to begin rethinking its retail experience
— and IT would be central to that effort.
The future store experience will make the
stores hubs of the community — nodes on the
neighborhood network. Dot-com functions on
countless devices — wired and wireless — will bring
associates and customers closer together in a simple
and seamless collaboration that makes it easy for
Web-Based Era
'90s'00s The Environment
Applications Portfolio Automated business processes; electronic commerce; knowledge management; virtual organization and supply chain reengineering.
Executive Attitudes IT, particularly the Internet, viewed as transformational, a driver of strategy; IT investments now more attractive in terms of costs and time scales
The CIORole Internet developer and manager
Tasks Develop new business models for the Internet; introduce management processes that leverage the intranet
There's an
interesting litmus
test of a CIO's
business orientation:
Ask him who his customers are. Ask yourself.
18 // CIO Straight Talk 19Are You a "Reincarnate CIO"? //
customers to do business with Lowe’s. Customers
will leverage special bar-code tagging to access greater
information on products and services, comparison
shop and communicate with knowledgeable
product specialists.
Blahnik says that, of the 11 major strategic
initiatives at Lowe’s, nine have IT at the heart of value
realization. “The evolution is in the role of the CIO,”
he says. “In the past, CIOs were about cutting costs
and about aligning technology with strategy. Today
the CIO is expected to drive innovative business
strategy, while delivering the technology that enables
speed to market.”
There was a time when a CIO would never be
deeply involved in customer initiatives like those at
Lowe’s. But Lowe’s is hardly an anomaly. Deb Hall
Lefevre, VP, IT Enterprise at McDonald’s, says she
has some traditional IT responsibilities – for example,
simplifying, standardizing and modernizing the
company’s technology – and less traditional ones,
such as helping to shape the customer experience
and brand-building. “Technology remains an
important enabler of our growth as we seek to further
differentiate our brand,” she says.
Focus on ROI. Many CIOs point out that one of
the surest ways to align IT with business — and to
earn the respect of senior business executives — is to
measure the ROI of IT investments in terms of their
business benefits.
Assessing the returns on technology investments
can be devilishly difficult, though, as any CIO knows.
Although nearly one-third of the HCL-Knowledge@
Wharton survey respondents said they were able to
track and estimate return on investment from IT
projects, more than half reported being able to do
so only sometimes — and nearly one-fifth said they
never could.
To determine the benefits of an IT investment,
it’s important to track and capture business data and
then measure its value to the company. Tracking data
has become easier, and many companies now collect a
great deal of information. The problem is that many
aren’t aware of what data they have and, if they are,
what to do with it.
Smart Computing EraToday
The EnvironmentApplications Portfolio Deep vertical industry focus; blended elements of hardware, software, and network technologies, which optimize process results and ROI
Executive Attitudes Real-time situation awareness and automated analysis to help firms solve smarter and more complex business problems
The CIORole Business visionary, industry-specific manager
Tasks Build more industry-specific solutions, as the task of optimizing the value of assets and liabilities will vary dramatically from industry to industry
Filippo Passerini joined Procter & Gamble as a systems analyst in its Italian offices in 1981. For two decades, Passerini held both technology and global business posts within the $80 billion consumer products giant before being named CIO in 2004. Today, Passerini, a native of Rome, retains his CIO title but he is also president of P&G’s Global Business Services (GBS) unit, one of the company’s four “pillars” that form the core of its organizational structure. The GBS unit was created in 1999 to handle the company’s IT needs, and its unique business structure has saved P&G more than $600 million through shared services over the years. Rather than being viewed as simply a services organization, GBS is itself a brand within the company and Passerini has used his post to broaden the impact on technology throughout P&G. Prior to 2004, IT was a separate organization but as CIO, Passerini brought IT into the GBS fold. He changed the name from IT to Information and Decision Solutions so that the focus would be less on providing technology and more on providing business solutions. Passerini believes that IT people are often given short-shrift and are, in fact, well-equipped to be change agents within the organization. //
Filippo Passerini, President, Proctor & Gamble’s
Global Business Services unit, and CIO
Snapshot of a Reincarnate CIO
Sources:
Andrew H. Bartels, “Smart Computing Drives the New Era of IT Growth,” December, 2009.http://blogs.forrester.com/vendor_strategy
Jeanne W. Ross, David F. Feeny, “The Evolving Role of the CIO,” August 1999, MIT Center for Information Systems Research white paper
21Are You a "Reincarnate CIO"? //20 // CIO Straight Talk
Even the business dashboards that some companies
have developed to interpret the significance of captured
data and thus create a window onto business operations
have mostly been inadequate, serving up abstract sum-
maries of monthly or regional financial reports.
A growing number of CIOs see this as an
opportunity to establish methods for better analyzing
the raw information, moving operations data through
the IT layer to provide insights and intelligence that
will help business decision making. An enlightened
CIO has a dashboard with predictive indicators that
are more actionable and real-time than a typical
passive business dashboard.
For example, final sales figures aren't the sole
metric. IT systems are linked to operations and
highlight detailed drill-downs into key databases.
Instead of, say, simply reporting monthly statistics, a
progressive dashboard might signal in red, green or
amber the status of current costs or inventory levels
and issue alerts when the levels would have a material
impact on sales.
Rethink the nature of partner relationships. Most large companies have, to varying degrees,
engaged IT service companies as partners to carry
out an array of IT tasks. “The way technology is
changing, no one person or group or company can
stay on top of it all and do everything on its own,”
says Marty Racioppi, Head of the Technology
Sourcing Office at Pearson, the London based
education, business information and consumer
media company. Because of that, though, a CIO
“must understand how to create and manage
partnerships whose result is innovation, within the
boundaries of costs.”
This kind of relationship goes far beyond the
traditional arms-length outsourcing or offshoring
agreement that is designed primarily to cut a
company’s IT costs by farming out IT functions to
low-cost programmers in a country like India.
Albert Perruzza, SVP, Global Operations, Global
IT and Business Redesign for The Reader’s Digest
Association, says the primary goal of a partnership
is to help Reader’s Digest “evolve IT from a ‘service
provider’ to a ‘value creator.’”
Rod Harris, SVP, Information Systems, at U.S.
Foodservice, a major food distributor, calls the
optimal partner relationship “right-sourcing” – that
is, a means of enabling his company’s IT function
to “bring the right resources with the right cost
Snapshot of a Reincarnate CIO
Philip Clarke, CEO-Designate, Tesco
Philip Clarke first worked at supermarket giant Tesco as a 14-year old shelf stacker in his native Liverpool. As the son of a Tesco store manager, the famed British retailer has literally always been a part of Clarke’s life. After earning his university degree, Clarke returned to Tesco in 1981 and has spent his entire career at the world’s third largest retailer, its $95 billion in sales behind only Wal-Mart and Carrefour. As Tesco’s CIO, Clarke has managed to combine his oversight of the company’s technology efforts with deep immersion on the business side. He has not only sat on Tesco’s board since 1998 but he served as a store manager, a buyer, a marketer and the leader of the company’s international expansion, especially across Europe and the Far East. Tesco operates in 14 countries and has planted a flag in the U.S with its Fresh and Easy stores. Clarke managed the company’s supply chain and added the CIO title in 2004. Overseeing technology for a global retail giant with more than 2000 stores and nearly 500,000 employees is a daunting task, especially when that company has been in a major growth mode for more than a decade. But when Sir Terry Leahy, Tesco’s acclaimed CEO, announced his decision to step down in March, 2011, he and the board didn’t hesitate in naming Clarke as his successor. //
“Employees First” and the Reincarnate CIO
The Reincarnate CIO drives innovative transformations not just of IT operations but of the entire business. But while the CIO may establish this as an IT goal, he or she isn't likely to personally come up with all – or any – of the specific innovations that together result in the transformation.
For those innovations, the CIO must rely on the people of the IT organization. And that includes those who work far down the IT hierarchy, directly with their counterparts from IT’s internal customers – Marketing, Sales, R&D, Logistics. In fact, the CIO should realize that many of the most valuable innovations won’t come from R&D or edicts from the senior IT management team.
Instead, they will emerge from day-to-day interactions between IT employees and their customers in other parts of the business, as they together work to find value-creating solutions for those internal customers. With any luck, these innovations will find a path to rise up through the organization, so they can be utilized in other situations and parts of the company.
HCL’s efforts to adopt this kind of approach across the entire business is the subject of the book “Employees First, Customers Second,” by CEO Vineet Nayar (Harvard Business Press, 2010). Through a variety of relatively simple initiatives, Nayar and senior HCL managers set out to “enable, encourage,
and enthuse” employees, particularly those who work in a company’s “value zone” – that is, the place where value is truly created, the locus of interaction between customers and front-line employees. The aim was to inspire employees to come up with innovative solutions that would create value for both customers and HCL.
The “Employees First” approach has several important elements:
Creating the • need for change, through a process dubbed “Mirror Mirror,” in which the organization and individuals candidly assess where they are now and where they dream of goingCreating a • culture of change, by increasing transparency throughout the company, from financial results to employees’ 360-degree review of senior managers, which are posted on the intranetBuilding a • structure for change, by making managers as accountable to employees – especially customer-facing employees, who create most of a company’s value – as employees are accountable to their managers Transferring the • responsibility for change, by pushing it down in the organization and empowering employees to make changes that have the potential to transform the entire business
The “Employees First” philosophy helped fuel a surge in HCL's growth in the past five years. It has attracted the attention of academics (Harvard Business School did a case study on the approach), the media (Fortune magazine has characterized HCL management as “the world’s most modern”), and analysts (a Gartner research report highlighted the customer benefits of “Employees First”).
The approach has also yielded numerous employee-generated ideas for innovative products and services. These include innovations in cloud computing, described beginning on page 67; an iPad application that can boost sales productivity through an interactive order management and tracking system, described on page 66; and the IT cost-reduction ideas described in the Appendix.
Whether cost-reduction, greater operational efficiency, or business transformation is the goal, a Reincarnate CIO will benefit from an appraisal of whether an “Employees First” approach could yield similar benefits in his or her own organization. //
More information on “Employees First, Customers Second” can be found at www.employeesfirstbook.com.
22 // CIO Straight Talk 23Are You a "Reincarnate CIO"? //
Straight Talking Dispatches From the Front Lines
This section is the heart of this issue of CIO Straight Talk, the presentation of a diverse array of CIO and
other voices. Some of the articles, based on in-depth interviews, feature the experiences of individual
CIOs or others who have overseen IT implementation projects. Other articles are concise case studies that
examine the ways companies have addressed various IT challenges.
A number of other pieces look at current issues affecting CIOs. In fact, most of articles focus less on
technology than on broad concerns of top technology executives. All of the articles – which are loosely
grouped into four sections about different types of value creation – relate to the day-to-day work of IT
professionals.
The articles aren’t meant to offer definitive solutions that apply to the situation of every reader. Rather, they
are designed to stimulate thinking about the challenges faced by the CIO and to what degree the solutions
represent “transformational” responses to those challenges.
The companies mentioned in the articles and the case studies are HCL clients. Many of the featured ideas
and insights grew out of HCL’s work with the company or the featured CIO.
to deliver high-impact solutions to business in the
accelerated time frame that business demands.”
“The driver today is the total cost of operations,
which includes driving up service levels,” says Racioppi.
“But relationships with partners should also be about
innovation. That puts more of the responsibility on
your outsource partners to understand your business
and where it is going. In some ways, they have to be as
conversant with your business as you are.”
Racioppi adds that an external partner also brings
to the table insights gained in its work with other
clients. “Ideally, in my view, partnering works best
when you have access to everything an outsource
firm learns, leveraging those learnings across different
industries. The goal of a partnership is not simply
to have a good working relationship between two
organizations. Rather, it is to cross-pollinate ideas
across a wide spectrum of organizations to really get a
grasp on the way things are changing,” he says.
To do that, though, CIOs must develop their
relationship-building skills. “Good partnering doesn’t
just happen on its own,” Racioppi says. “It takes
management, on both sides of the partnership, and it
requires transparency. Good partnering takes work.”
Do You Dare Become a Reincarnate CIO?The transformational goal that characterizes a highly
evolved Reincarnate CIO is an undeniably challenging
one. The stakes are high. The demands take most
people far outside their comfort zone. Leadership
skills will be required to get people to follow you on a
journey to an uncertain destination, one that will be
marked by sometimes painful change.
Many CIOs say privately that it takes tremendous
confidence and even courage to break out of their
familiar responsibilities, to assert themselves in
the senior executive suite by taking the lead on a
corporate transformational initiative. In fact, a lack of
confidence may be the biggest barrier to becoming a
Reincarnate CIO.
One of the ways to gain confidence is to
share experiences and insights with peers at other
companies – which is a primary purpose of this
publication and the online forum and in-person
activities that grow out of it. We hope that hearing
the experiences of fellow CIOs and other IT
managers – engaging in conversation with them –
will lend confidence to your own efforts at tackling
transformation challenges, in your organization
and yourself. //
24 // CIO Straight Talk 25Straight Talking: Dispatches from the Front Lines //
Many Brands, One System
//
// Generating Value For Internal Business Operations
Virginia GuthriePosition: Chief Information Officer and Senior Vice President for Information Technology
Company: Dr Pepper Snapple Group, U.S.
Professional Background: Virginia helped drive the legal and technical separation from Cadbury Schweppes P.L.C., putting in place the team and processes for DPS to operate as a stand-alone IT function. Earlier, she had been CIO at Coors Brewing Company and handled leadership roles at Frito-Lay and Celanese
Corporation.
Education: Bachelor of Science, Western Kentucky University; Master of Business Administration, University of Dallas
Don’t get me wrong. I love this job because it’s one of the jobs in the company where you really see what is going on end to end. That is truer now than ever. We’ve had to understand the entire business, in order to make the systems work and that has helped us positively impact the business process. The pace of change today is just out of sight. Things have always been fast in IT, but now if we are not buying something, selling something or making a whole new venture, it’s just not a typical week here.
A Collection of Antiquated SystemsJust two years ago, DPS was part of Cadbury. Less than a year before that, the company began buying up many of its independent bottlers. Even before that, the Mott’s and Snapple brands had their own individual IT systems, as did the Concentrate division. All the systems were antiquated, and the bottlers, most of whom were independent companies, were each on different systems. My mandate is to pull all this together into a single coherent IT entity that crosses all brands and business units. Inside DPS, this is referred to as “one source of the truth,” a single information system aligned across all the businesses.
My focus has been on five key requirements:
Align IT to the business•
Enable the business to “Grow Sales and Cut Costs”•
Reduce the cost of operations•
Ensure that the level of service is fit for purpose•
Enhance the business knowledge of my IT team•
Connecting to the BusinessI knew as soon as I became a CIO that running help desks and data centers was not where DPS needed to “own” expertise.
It is important that I have a very strong business role in the organization. Outsourcing much of our IT development work affords me the time to focus on business issues. Along with the good work we’ve done with HCL, there are also some subject matter experts
in IT who are very strong from a business perspective, and they have good architectural and configuration skills. I’ve outsourced much of our IT requirements to HCL, and we’ve put together a long-term plan that focuses everything around our business process. We are getting key metrics right up front and lining up our key processes. We track those by doing a lot of our process flows during the projects. Usually, when we turn those projects over to operations, the process flows totally fall apart. We turn the project over to HCL and we’re going to hold them accountable, along with IT and our business units.
For example, we’ve started a high-level project involving our customer-to-cash process. One of our key metrics is that we want to do a perfect order; in other words, the customers get exactly what they ordered exactly when they want it. Any deviation from that perfect order can be tracked and corrected.
The business alignment is definitely better than when we were with a global candy company. However, IT has also been a big piece of the change and consolidation in the company, which
The pace of change today is just out of sight. Things have always been fast in IT, but now if we are not buying something, selling something or making a whole new venture, it’s just not a typical week here.
Having been a CIO in the beverage industry for more than 10 years (and having spent many more years as a consumer packaged goods industry finance executive), I’ve lived through some dramatic technology and business shifts during my career. But few things could have prepared me for the challenges of my last four years as CIO at Cadbury Schweppes and now the Dr Pepper Snapple Group (DPS), which was spun out of Cadbury as a separate company in 2008. Though DPS is a new company, it is at the same time a huge, thriving business made up of more than 50 top brands of carbonated soft drinks, juices, teas, mixers, waters and other beverages. With names like Snapple, Mott’s, 7Up, Canada Dry, A&W, Schweppes and Welch’s, DPS is one of the largest beverage companies in North America, with $5.5 billion in sales in 2009.
Unlike a CIO at a true start-up, which has a clean technology slate from which to build efficient IT systems, I inherited an eclectic mix of technology infrastructures that somehow had to be melded into a cohesive, state-of-the-art IT organization. And given the highly competitive nature of the beverage marketplace, along with the ceaseless need to cut costs and promote growth, my job has been more than challenging.
When Dr Pepper Snapple Group spun off from Cadbury Schweppes, the beverage maker seized the chance to consolidate its different IT operations and align them with business goals.
26 // CIO Straight Talk 27
Case 1
A Holistic Approach to Procurement
The Company: KLA-Tencor The KLA-Tencor Corporation, based in Milpitas, Calif., is a $1.5 billion supplier of process-control and yield-management solutions for the semiconductor and related nanoelectronics industries. Its products are also used in a number of other industries, including light-emitting diode (LED) and data storage manufacturing, data storage, solar process development and control, and general materials research.
The Challenge: A Workout Regimen to Improve AgilityIn 2006, KLA-Tencor identified a number of goals that it felt were imperative to achieve if it was to improve the flexibility and agility of its operations. It needed to enhance the oversight of its supply system. It needed to synergize operations across multiple business divisions. It wanted to enhance the satisfaction of both its vendors and its internal customers. And it had to reduce the back-office costs of procurement as manufacturing shifted to the Asia-Pacific region (APAC).
The Solution: A Radical New ApproachWith the help of HCL Technologies, KLA-Tencor decided to adopt a radical new way of looking at procurement operations. It would put into effect a holistic vendor management and supply approach. In the process, it would adopt new tools to increase process automation, using carefully defined metrics and service-level agreements.
Business Benefits: Reduced Cycle TimeKLA-Tencor was able to substantially reduce its purchase order processing time — dropping it from four days to one day. At the same time, unnecessary inventory returns were substantially reduced. What is more, the cost of processing an average purchase order dropped by as much as 67 percent.
Case 2
Analytics for Controlling Spending
The Company: UTC Fire and SecurityUTC Fire and Security is a $5.5 billion business based in Farmington, Conn., that provides fire safety, combustion control, and electronic and physical security solutions internationally. The company offers fire safety products in industrial, commercial and residential settings. UTC Fire and Security is a subsidiary of the United Technologies Corporation.
The Challenge: Conquering Cost Concerns For an increasing number of companies, analyzing and optimizing spending has become an area of intense focus in supply chain optimization. In 2003, the Aberdeen Group issued a report concluding that savings opportunities totaling close to $260 billion were being missed by companies across the globe because of inadequate analysis capabilities related to expenditures.
Like many other manufacturing companies, UTC believed it needed mechanisms to control costs. In 2006, UTC set out with several critical business objectives in mind. It needed better oversight of spending across business units, regions and headquarters. Data aggregation from multiple legacy and enterprise resource planning systems (UTC at that time had 16 different ERP systems) had to be brought under control. Cost compliance could be improved through variance reports for each business unit or region. Cost analysis could be enhanced to help identify suppliers with the lowest total costs.
The Solution: An In-House Management Tool UTC sought HCL’s services in developing a Web-enabled platform for reporting savings and managing spending. An in-house tool was developed, tested and administered by the HCL business process outsourcing function. As UTC and HCL embarked on this journey together, they came across a big hurdle: how to ensure data sanctity. Not only did the data
Straight Talking: Dispatches from the Front Lines //
has been very tough. And, yes, it’s tough on the business to spend years on foundational work. For example, we rolled out our handheld sales system and implemented SAP in the same year. That was a challenge. We impacted a lot of route drivers, warehousemen, district managers — people who don’t spend a lot of time with IT — and we changed a lot of their processes. The systems worked well, the information is much better, but it was a drain, a big adjustment for many of them. But they understand that this is like a foundation for a house. You have to have it.
At DPS we work to be clear about roles in projects — both IT and the business unit have a place at the table. The business unit’s role is to define their requirements and needs. I insist they prioritize everything they need, and IT’s role is to figure out the best way to deliver that requirement.
Starting the Journey to "One Source of Truth"As the business units are working on the strategy, I want to be an important enabler, be on the team and bring ideas as to what IT can do to make a difference. Right now, we are revisiting our long-term IT plan. We break it out in two different ways: a capability model, which is very similar to the SID process model in which you have commercial, supply chain and your enabling capabilities. After establishing business needs and our roadmaps, we prioritize programs
across three buckets. The first layer of programs is foundational programs for the organization. These are the transactional projects like ERP and handheld selling systems, which feed a lot of our systems. The second layer is what we call information, which is where all our business warehouse, master data management and decision support tools are. Once our transactional information systems are established, we’ll be working hard to manage our information layer as the “one source of the truth.” The third layer is where you can have the most direct impact on the business. This represents our growth and efficiency projects, where we work with the specific business, usually ROI-driven needs — warehouse management, trade promotion spending and many other marketing and supply chain activities.
We’re about 70 percent of the way through the first foundational layer; we have a good start on the information layer, and have tremendous opportunity with the growth and efficiency layer. Given the global economy, IT also faces the DPS mantra to grow sales and cut costs.
For example, DPS owns about 50 percent of our bottlers today. Coca-Cola, Pepsi and independent bottlers distribute the other 50 percent. Working with more granular data in our data warehouse is a large priority for our ability to grow sales. That’s where we will do a lot of distribution analysis and pricing scenarios.
Clearly, this is a journey, but we’re getting closer, and what I expect is that we will achieve our goal of a single source of the truth across our entire business. With the investments we are making today, we should be very close to that in a couple of years. It makes coming into work pretty exciting for an IT team. //
Further reading: Roy C. Wildeman, Mike Gilpin, Andrew Magarie, Forrester Case Study, “Dr Pepper Snapple Group Partners With HCL To Drive Greater Service Centricity,” April 2010. http://www.hcltech.com/insighthcl/pdf/case_study_dr_pepper_snapple_group_partners.pdf
It is important that I have a very strong business role in the organization. Outsourcing much of our IT development work affords me the time to focus on business issues.
High-technology and manufacturing companies are increasingly looking toward streamlining their procurement, spend and order management business operations to achieve a long-term competitive edge.
Case Study
KLA-Tencor, UTC Fire & Security, 3M Optimizing Business Services
28 // CIO Straight Talk 29Straight Talking: Dispatches from the Front Lines //
// By quantifying returns on its IT investments, both in terms of cost savings and service improvements, the Birmingham City Council determined that it realized $600 million in “cashable benefits” over three years.
// Generating Value For Internal Business Operations
Glyn EvansPosition: Corporate Director of Business Change
Organization: Birmingham City Council, U.K.
Professional Background: With 30 years’ experience in local government, in 2003 Glyn was appointed Director of Business Solutions & IT at Birmingham City Council to lead its business transformation program. As Corporate Director of Business Change, he ensured that the transformation was adopted, embedded and implemented across the council. Glyn chairs the Society of IT Management's Futures Group and is a member of the CIO Council, an advisory body established by the U.K. Cabinet Office's e-Government Unit, and the Local Government Delivery Council.
When people talk about business process reengineering and technology-driven transformation, they tend to think about corporate entities. But we in the public sector face similar if not tougher challenges within our organizations, and as Corporate Director of Business Change of Birmingham City Council (BCC), I face the same difficult challenges as any corporate CIO.
Located in the British West Midlands, BCC is the largest local authority in the European public sector. BCC has a budget of more than $4.5 billion and 57,000 employees serving the one million citizens of Birmingham. It is responsible for providing more than 250 services including social care, public health, social housing, the environment and urban development. In other words, our pressures are more widespread and demanding than most companies.
Having served as BCC’s official CIO (what we then called Director of Business Solutions and IT), I know what it’s like to drive business transformation across multiple “business” units. I had a 500-person department with a $70 million budget. Like other organizations, we faced daunting changes due to financial pressures and the increasing expectations of our customers. In April, 2006, BCC realized we needed
Measuring and Managing the ROI of ERP
collection process have to be organized, but it had to result in timely reporting, it had to avoid duplicating data and it had to minimize changes in data.
The effort encompassed 200,000 supplier records across 40,000 vendors, and it resulted in process standardization across various business units, continuous analysis and reporting of spending data, and ongoing identification of opportunities to reduce costs and realize savings.
Business Benefits: Sailing Past the TargetsAs the Web-based system is used and refined, it has resulted in improved decision-making capabilities and better cost control. The use of e-auctions, for instance, is credited with producing $50 million in savings. And e-sourcing overall has enabled UTC to achieve savings of up to 29 percent, compared with a target of 7.5 percent.
CASE 3
Keeping the Goods Flowing
The Company: 3MThe 3M Company is a multinational corporation based in St. Paul, Minn. 3M produces thousands of products for scores of fields, including health care, highway safety, office products, abrasives and adhesives.
The Challenge: Seeking Superior Processes In a customer-driven market, organizations are constantly seeking superior order management. This involves every process, including planning and forecasting, acquiring and creating accurate orders and contracts, handling order changes, and resolving fulfillment and post-delivery problems.
The Global Channel Services division of 3M aspired to significant improvements in its sales channels. It wanted to reduce its costs of order management, but it was also determined to fill orders and manage its supply chain effectively. And it wanted to provide high quality internal and external customer support that would drive additional sales. Finally, it set out to create a proactive communication channel with customers, providing round-the-clock order management and shipment tracking support for APAC and Europe business customers.
The Solution: A Six Sigma Approach In partnering with 3M, HCL adopted a Six Sigma approach toward running the order-management process. The joint effort
had its share of challenges and roadblocks. Not only were there minor quality issues to start with, there was resistance toward implementing best practices. For instance, the immediate fallout of improved quality was increased turnaround time (TAT). 3M was faced with the difficult task of improving TAT without compromising on quality of order processing.
Part of the solution involved transforming people's attitudes, and the partnership had to make use of its knowledge of the Hawthorne effect, cognitive dissonance theory and other workplace factors to help to increase the productivity of the team. As people's attitudes were transformed, there was ultimately a deep impact on productivity.
Business Benefits: Better Performance, Better RelationshipsFor 3M, the improvements were tangible. Information flow within the 3M supply chain network was made over. Coordinated orders for timely shipment and real-time information about the status of shipments helped improve on-time delivery by up to 92 percent. Order processing turnaround time improved markedly. The average time taken to process an order decreased from two days to three hours. Thanks to increased responsiveness to customer needs, strategic relationships with logistics providers and end customers have been greatly enhanced. //
Reference:Aberdeen Group, "The Spending Analysis Benchmark Report — Dissecting aCorporate Epidemic," January, 2003
30 // CIO Straight Talk 31Straight Talking: Dispatches from the Front Lines //
innovative changes in our business processes in order to provide superior service to our citizens, save money and be in line with the national government’s strategic directives of the time. To achieve these three goals, we set in motion a business transformation project that was the largest of its kind in the British public sector. We would come to invest more than $1 billion in order to save nearly $2.3 billion (profiled over a 10-year time frame) and dramatically improve our services through rethinking our ways of working. The program was made up of nine individual business transformation workstreams: Corporate Services Transformation (CST), Customer First, Excellence in People Management, Excellence in Information Management, Working for the Future (housing), the environment, adult social care, child social care and housing.
The first of these programs, CST, would be the pathfinder for all the others. Because SAP Business Suite was selected as the foundation software for CST, we needed a strategic partner to lead the project and spearhead the SAP implementation. We chose HCL AXON, a firm we had come to know well since our first work together in 2005, to be our partner. And our first challenge was a daunting one: the entire program had to not only improve services but deliver a financial return on investment of 2.5:1. If we couldn’t bank the $1.35 billion in total benefits generated from just the CST portion of the plan, the overall 10-year program would not be funded. In addition, the CST project had to be delivered against a set budget and provide transparent and comprehensive financial information to all stakeholders.
Turning these ambitions into real-world results was not easy. But we had a good plan and a strong partner. There were three core elements to the project:
Business transformation• SAP implementation• Business benefits realization•
Finding the Right MethodologyI’ve read that, irrespective of sector, more than 50 percent of business transformation projects fail to deliver the expected benefits. This would be a problem in any organization, but in the public sector, which tends to be highly risk averse, this is a very significant issue. We decided we had to develop an approach to managing the risk. So we developed a change management methodology, which we called CHAMPS 2.
What I’ve learned over the course of my IT career is that business transformation inside any organization calls for absolute commitment from the business executives, expert guidance from experienced professionals and a proven, well-designed methodology. We were quickly able to check off the first two and for the methodology, we worked together with HCL AXON and other partners to jointly develop the CHAMPS2 methodology.
CHAMPS2 requires us to have great clarity about what outcomes we are aiming to achieve and how they will be realized, and one aspect of this that we put a lot of effort into developing the business case. Our business cases go through four iterations: We have the strategic business case, the outlined business case, the full business case and the revised full business case. And by the time we get to the revised full business case, we have designed the future operating model in detail. Every benefit that the project will deliver is recorded on a benefit card. A major part of my job now is to monitor the delivery of those benefits and hold individuals to account for their delivery.
One of the things CHAMPS2 does is focus heavily on benefits. The benefit cards, an idea we developed from working with AXON HCL, are each owned by an individual officer with the council who is responsible for its delivery. A benefit card might record a saving to be realized or a service
But that’s not enough. $600 million in signed benefits would make most SAP customers proud. But BCC expects even more business benefits as we continue to refine and implement the system. We’ve received positive feedback from BCC suppliers, and it is clear that efficient new processes were long overdue. For example, more than 95 percent of invoices are now paid on time, a vast improvement from the 65 percent of the past.
Lessons LearnedWe’ve also tracked some key lessons learned during the process. Among these are:
Gather as much background data — benchmarks, • feasibility studies and current key performance indicators — as possible to create a target of achievable business benefits.
Make sure you have full buy-in from all key • stakeholders, especially senior management and, in the public sector, politicians.
Design formal project deliverables with formal • measurement techniques.
Communicate progress on a regular basis across • the enterprise.
Get the right training for the right people.•
Celebrate all successes.•
improvement to be made, and in each case it would need to be measurable.
An example would be a benefit card aimed at improvement in service, taken from our Customer First program, which is establishing a consistent approach to customer service across the organization. We chose a target of driving up customer satisfaction levels from 59 percent (i.e., who were either satisfied or very satisfied with the council), up to 85 percent. So that’s a measurable benefit. In the same way, if you look at CST and the cashable savings around that, our head of procurement has a savings target for each year, which is defined on a benefit card.
Five Key ProcessesThere were five key processes at the heart of the CST project. These classic back-office ERP applications included:
Business management, including reporting • and planning
Business support, including systems and skills•
Record-to-report business process•
Service-to-cash business process•
Procure-to-pay business process•
From the last of these — procure to pay — we projected the most savings, which would be accomplished with better spending controls, renegotiated contracts, a consolidation of current spending with fewer suppliers, and supplier contract compliance across BCC.
Our SAP project, which we code-named Voyager, successfully went live (though with the usual teething problems you would expect from an implementation of this scale) to 2,700 business end users and 100 super-users, in October, 2007. The results have been impressive. CST has, to date, realized more than $600 million worth of savings in just over three years. Its target is to deliver a projected savings of more than $800 million.
Every benefit that the project will deliver is recorded on a benefit card. A major part of my job now is to monitor the delivery of those benefits and hold individuals to account for their delivery.
32 // CIO Straight Talk 33Straight Talking: Dispatches from the Front Lines //
The Company: Fonterra Cooperative Group, New ZealandFonterra Cooperative Group is the world's largest exporter of dairy products, a leader in dairy science and innovation, owner of a significant portfolio of brands in Asia Pacific, and a partner to many of the world's leading food companies. New Zealand’s largest company, with revenue of NZ$16 billion (US$11 billion), Fonterra is also the world’s largest dairy products exporter, with offices in more than 40 countries and sales in 140.
The Challenge: Scaling Up GloballyOperating from a small market like New Zealand and having diversified operations across multiple geographies run by a centralized IT operations team, Fonterra was looking to scale up operations on a global basis across the breadth of its services, while demonstrating capability and maturity in the IT space.
The Solutions: Speed the PlowFonterra partnered with HCL in 2007 to ensure that all of its applications across the entire value chain — from the farms to manufacturing to product distribution and logistics — were up and running when required and that support across business operations would be seamless.
Two key areas can be highlighted among the various tracks of the engagement: SAP-based Global Trade Services (GTS) and Advanced Planning and Optimization (APO).
GTS: With 95 percent of its product being exported, Fonterra sought ways to increase productivity and reduce risk in handling the large volume of trade documents required. With HCL’s help, Fonterra turned to the SAP BusinessObjects GTS 7.2 solution, which automates global trade processes and enables firms to manage large numbers of business partners and high volumes of documents, while also helping them to comply with constantly changing legal regulations.
APO: As Fonterra is in the business of perishable goods, daily sales and operations planning is one of the most critical business processes. The company traditionally had disparate systems and incongruent means of cataloging its products. For instance, the same product produced across different factories may have had different material codes in the SAP system, creating immense inefficiencies across the supply chain, particularly in planning and demand forecasting.
The Deployed Product Interchangeability functionality developed by HCL, which at run time substitutes the original
product with the product made in the factory, helped Fonterra bring integrity into the way it managed product classification and thus sped up processing.
The Business Benefits: The Wonders of Automation
Fonterra realized enhanced performance through both the GTS and APO initiatives.
GTS: In the first year of operation, automating and streamlining the trade document processes have contributed to a 22 percent productivity increase. For example, automation of the electronic Chamber of Commerce certification process, whereby documents are now sent and received back electronically with a single keystroke, has saved approximately 8 to 10 minutes of user processing time per transaction. And the implementation of various e-interfaces has significantly reduced printing, stationery, and courier costs and allowed customers to expedite the import clearance processes earlier.
There has also been a reduction in risk. By deploying GTS in the United States, Australia and New Zealand, Fonterra now has a centralized platform that manages 80 percent of its export business. HCL has worked closely with the Fonterra Documentation Centre to implement uniform standards and practices across all these export locations, including increased system checks for incomplete data in a transaction (thus eliminating the requirement that users manually verify import country regulatory requirements) and improved processes for the system to select the correct set of documents on country-customer-product-payment term requirements. In addition, technical risks have been reduced through, for example, the standardization of coding patterns and coding standards for discretionary deliveries.
APO: The Deployed Product Interchangeability function, by eliminating the incoherent cataloguing of products, combined with other enhancements to remove the biggest bottleneck in the Level Management Chain. This reduced delays in procuring the product catalogues, which had been resulting in needless hold-ups in SAP BW report generation.
With this improvement, the daily processes of numerous departments, which previously couldn’t begin until 1 p.m., now get under way at 8.30 a.m. In addition, “blackspots” — a measure of the number of times APO issues prevent planning activity — were reduced from a peak of six in February 2008 to nearly zero. //
Sound project management is a must. But sound change management is also required, including a robust approach to business case development and approval. I’m always amazed at how many projects begin without defining the outcomes, including ROI, in measurable terms. Unless we put these in place, we won’t start a project. I’ve worked in the IT community in local government for 30 years, and for most of those 30 years, we could have done a much better job by getting a return on investment
from our spend in technology.
In this regard, I believe CIOs must make the journey to being much more responsible for business change, not just the technology. In a sense this is about
IT becoming a true profession, with CIOs taking responsibility not just for their actions but also for the implications and outcomes of their actions.
The CIO MandateTo me, the role of IT is to be a strategic enabler of change. I’ve spent much of my career with IT being perceived as nothing more than a tactical add-on to business. The CIO has to be the person to change that perception, because no one else is going to do it.
Critical to a CIO’s success is his or her relationship with the executive management team, and in the public sector, with the politicians. You’ve got to put serious effort into establishing and building those relationships. This requires the CIO to take on a business leadership role. If you want to take the business with you, you have to sit down with management and ask the key question: If we’re going to start a business change process, what would success look like? And then work with business management to achieve that success. //
Reference: Derek Prior, AMR Research, "HCL AXON Helps Birmingham City Council Realize Huge Business Value from SAP," November 2009
Being in the public sector creates an added dimension to the successful completion of such initiatives. If you don’t have political ownership, as soon as there’s a bit of a rough ride — and you can’t install these change programs without some problems — there is a danger that there will not be the support required. At that point the project is likely to be stopped; I’ve seen that happen many times in my career. So politicians have to be actively engaged in a major change program such as this.
If I was going to characterize the three main causes of failure, that would be one of them: not enough support at a senior level, either an executive or a politician. The second cause of failure is a lack of needed capacity and capability in delivering the change. Managers can’t be responsible for delivering a major change and still have the responsibility of delivering business as usual. You’d have to be superman to do that. So you have to make sure the change process is supported by putting in place additional capacity.
And the third reason for failure is not having an approach to change management, an effective methodology.
We certainly did not get everything perfect in this initiative. For example, at the start we didn’t put enough effort into engagement with staff and middle management within the organization. Though we were taking the top tier with us, there was often far more skepticism lower down the organization. We’ve now addressed this and we’re recovering from the situation, but of course it’s a lot harder to recover from a poor situation than to avoid it occurring in the first place.
Case StudyFonterra Cooperative Group Achieving Sweeping Business Transformation
The CIO has to be the person to change that perception, because no one else is going to do it.
34 // CIO Straight Talk 35Straight Talking: Dispatches from the Front Lines //
The global insurer launched a companywide customer-service portal. Although it was a clear win for customers, IT had to convince the various business lines that the benefits outweighed their loss of independence.
Kees SmalingPosition: Chief Information Officer
Company: AEGON N.V., Netherlands
Professional Background: Kees has more than 20 years’ experience in Information, Communication & Technology (ICT) — about seven years of that working on the other side with ICT technology suppliers and two years at AEGON.
He has diverse experience in insurance, general management, sourcing, change and people management. With experience in both ICT industry as well as the financial services industry, he brings a strong focus on business-ICT alignment. Kees was a panel speaker at HCL’s Global Customer
Meet 2010.
//
// Generating Value For Customers
Building "One AEGON"
As the second largest life insurance company in the Netherlands as well as one of the top global insurers, AEGON is known for its private and group life and pension insurance offerings. AEGON’s 30,000 employees serve 40 million customers in 20 countries around the world. Like all the players in our industry, AEGON faced a tough business climate during the harsh global recession. It was clearly NOT business as usual. We had to rethink our operational and strategic outlook and make timely decisions about how we work and interact with our customers. Given the difficult global economy, AEGON faced three key challenges in order to ride out the crisis:
Regulation: Due to the stringent regulations in the Netherlands, we in IT are under constant pressure to provide systems to fulfill all the requirements from our auditors and bankers. I’d say that at least 80 percent of our work is aimed at legislative issues, so we must be innovative and stay ahead of the curve.
Distribution: Most of AEGON’s revenues come through intermediaries such as independent agents. But more than ever, customers are seeking direct contact with AEGON. For example, when a customer needs to change her address, she doesn’t want to go through an intermediary to
centralized service desk and multichannel access for AEGON customers, regardless of the communication and distribution channels through which they bought products. Agents would also be able to access customer information for AEGON products through a single “agent desktop” portal. The portal is intended to replace more than 100 contact telephone numbers, e-mail addresses and interactive voicemail menus that have created confusing customer access points over the years.
This shift in our distribution channels was simply not possible 10 years ago when the ability to access data and products through a single channel did not exist. It was difficult to interact with different
kinds of data, and the solution back then was to build separate distribution channels. Today, we can consolidate different channels using the same back-end technology. But in order to do that we needed to implement an integration layer. It took us two to three years to build the infrastructure for this integration layer. Building the portal was not difficult, but having to build a whole new environment to support that portal was daunting. Now that the integration layer is in place, adding a data delivery channel can be completed in weeks.
Another new challenge is the need to modify our back-office process almost daily as opposed to implementing three to four new applications per year
do so, she wants to connect directly with us. Though we understand this desire, it puts IT in a difficult position due to the great dependency we’ve always had on our intermediaries.
New Competition: AEGON’s most challenging competition is now from the “new kids on the block,” the Internet-based insurers rather than the legacy old-line insurance companies. These new competitors are not burdened by “historical baggage” of legacy systems and infrastructures, and most new products are virtual, which means we must respond with new ways of innovating.
Getting to Strategy As CIO, I am fully aware that my role is changing and the focus must be on strategic business initiatives rather than serving as the technology service organization. Nonetheless, IT remains critical to the success of any organization in the financial industry. The whole industry is information-centric and though that is not much different from 20 years ago, the focus on IT today is far more strategic.
In order to confront these daunting business challenges, AEGON embarked on a “Loyal Customer” program aimed at customer retention by remaking the way customers interact with the company. You can say that the focus on efficiency is just to stay in the game, and the focus on the customer is more to win the game. We decided to use social media (Twitter, etc.) as a method for getting closer to our customers and learning what they really want. The aim is to build profitability and effective business programs using initiatives that target growth through innovation, better use of capital and creating customer-focused organizations.
To that end, we created the Shared Customer Contact Center Program, a project aimed at allowing customers to access all of AEGON’s various products through a single portal that would bridge our traditional business silos. The aim was to create a
You can say that the focus on efficiency is just to stay in the game, and the focus on the customer is more to win the game.
36 // CIO Straight Talk 37Straight Talking: Dispatches from the Front Lines //
Anyone who has been lured by better rates, wider coverage areas, better service and clever marketing schemes to switch telecommunications providers is aware how competitive this industry is. Customer loyalty is evanescent, and competitors such as BT know only too well that it requires innovation and focus to stay ahead of new technology, new customer bases and faster delivery requirements. To get caught behind could give its competitors the advantage.
The Company: British Telecom Group P.L.C.BT is the largest fixed telephony provider in the U.K., and it is among the world’s largest telecommunication companies, with operations in more than 170 countries. But even the biggest players must find ways to remain nimble and ahead of the curve. To meet this challenge, BT’s executive leadership, in 2007, set out a three-pronged initiative focused on addressing the situation. The goal was to emerge as an even better customer-centric organization.
The Challenge: End-User Experience, Time-to-Market and Cost The three key goals were:
“Right First Time”• – This is intended to enhance the end-user experience by delivering services right the first time and reducing cycle time required to repair defects and problems.
New Services Faster• – BT must reduce the time-to-market in introducing new services, along with a reduction in cycle time to achieve a competitive advantage in the marketplace.
Reduce Costs• – The goal is to optimize BT’s cost structure by reducing the number of business-impacting incidents in BT’s systems and creating added value by saving costs for BT’s business units.
The Solution: A Partnership to Deliver the Right Services at the Right TimeWhen BT approached HCL to help create and implement the Right First Time concept to reduce the number of incidents, HCL’s team decided to construct a 360-degree view of BT’s customer base that helped HCL build a Services Operation Framework. The idea was to create the “Right Services at the Right Time” for every customer, recognize the customers’ preferences and proactively introduce solutions to their problems. It also intended to reduce service errors, increase the Right First Time experience for every customer, standardize
BT’s operations, reduce duplications and install rigorous governance. In partnership with BT, HCL suggested a three-step plan to enable the transformation: standardize, automate and improve. The steps:
to standardize BT’s operations, HCL took end-to-end • ownership of 270 different applications on multiple platforms and worked across all four of BT's customer-facing business units.
to automate, HCL introduced a series of automation and • monitoring solutions for such applications as Wireless Field Force management and Incident Monitoring.
to improve, BT and HCL teamed up to create a number • of services that would be delivered automatically through standardized, tested procedures. This led to a series of proactive processes and technology improvements.
The Business Benefits: Enhanced Customer CentricityFor BT, the results have been a success. The partnership with HCL, along with other BT initiatives, have brought a dramatic reduction in the number of incidents over its applications estate, from 10,800 to 3,400 — a great contribution to BT’s overall Right First Time challenge. There was also a substantial reduction in cycle time across incidents — by as much as 76 percent for Priority One incidents — which means higher customer satisfaction scores. And service availability increased, while order management processing time shrank from 62 minutes to five minutes.
As BT gears up as a major corporate service provider for the 2012 London Olympics1, these improvements provide optimism that they’ll meet the ultimate Right First Time challenge. //
1. BT is the Official Communications Services Partner and a Sustainability Partner for the London 2012 Olympic & Paralympic Games.
as we did in the past. Having new and unprecedented communications with our customers means that we are more aware than ever of their changing needs. So transforming customer requirements means that we must have flexibility and agility to meet these changing business requirements.
Given the time and costs of building the new infrastructure, the Shared Contact Center project drew some criticism along the way. We had to prove to the business side that all this back-office work was worth the time and money. We had to build trust with the business units because we were taking people out of the comfort zone of a single silo having its own technology infrastructure. The portal connects across
silos and forces people to rethink internal business-technology alliances. The moment of truth came when the portal went live and people quickly realized that it had all been worth the effort. Of course, if I had to do it over again, I’d work harder to gain confidence and trust within the business units before embarking on the project.
Some employees believe that their needs may still be better served within the silos of the various business lines. But we had to look at this from our customer’s point of view, and that required the creation of “one AEGON.” Customers don’t care what the underlying business structure is. They want answers and products that solve a problem.
The End and the MeansNeedless to say, we’ve seen immediate increases in customer satisfaction. Both agents and customers, using the portal along with speech recognition and knowledge systems, have access to a single view of
the customer and a complete trail of customers’ contact history. Customers now encounter “one call and done,” rather than the nightmare of multiple phone numbers and multiple attempts to reach the company. We’ve installed technology that enables a single telephone number to service all customer inquiries without interactive voice response. All this has decreased the average handling time and increased the quality of service delivered, which was the goal all along.
For me, one of the key lessons learned in this project was to remain focused on the end goal and not get caught up in territorial or philosophical disputes. When building something like a portal
or integration layer, the tendency is to employ a centralized approach. But in so doing, you can easily get caught up in trying to create the best IT performance and become IT-focused rather than focusing on supporting an insurance company. Our goal was not to have the best IT performance but to find ways to make the company competitive.
Of course, that is easier said than done when you are building a central initiative like a portal that is to be overlaid across many business units. You encounter less of the ownership mentality from the individual business units because this isn’t their own unique technology solution. Instead, the focus falls on the IT organization and that can be problematic. Though some initiatives just don’t have a natural business owner to support them, the CIO has to find ways to rally support from the entire organization in order to create support and ensure success. Nobody said it would be easy, but today’s CIOs must be ready to see the new world differently. //
If I had to do it over again, I’d work harder to gain confidence and trust within the business units before embarking on the project.
Case StudyBritish Telecom Getting IT Right the First Time
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39Straight Talking: Dispatches from the Front Lines //
// Generating Value For Customers
Jeff CarlsonPosition: Senior Vice President and Chief Information Officer of SunAmerica Financial Group
Company: American International Group, Inc. (AIG)
Professional Background: Jeff is responsible for all information technology efforts across the business.Over his 15-year history at American General Life Companies (a division of SAFG), Jeff has held a number of senior leadership positions in the information technology and operations organizations.
Education: Bachelor of Science, University of Northern Iowa; Fellow, Life Management Institute; Certified Public Accountant and Chartered Market
Analyst designations
Life After Crisis: Lessons for IT
As CIO of the SunAmerica Financial Group, a life insurance and retirement savings business unit of American International Group, Inc. (AIG), I am sure the past two years have been among the most challenging of my career. The fallout from the September, 2008, financial crisis on Wall Street and the resulting impact on AIG was felt throughout the entire organization.
Though AIG’s predicament received widespread international coverage, the 2008 crisis impacted many other financial services companies as well. We suffered many of the same pressures that a number of our peers did in terms of considerably reduced sales, which put heavy constraints on our expense structure. We went through a difficult period of contraction in terms of both the amount we were investing and our staffing levels. During late 2008 and most of 2009, we went through a rigid process to identify those business lines that could successfully compete, as well as those where we did not believe there were sufficient opportunities for success. Needless to say, all this restructuring put tremendous pressure on the IT organization. Like most organizations during the downturn, we had to figure out how to do more with less.
This creates a paradox because to be able to leverage technology to do this kind of streamlining and process improvement requires a level of
accelerate the time in which we could receive a policy application. We also anticipate that the project will be critical to supporting a strategy in which we create more self-service opportunities for our customers. Offering the eSignature option supports a move in that direction.
In addition, we envisioned better control over compliance and legal processes, a reduction in cycle time that would reduce costs, and a drop in process errors. From a legal perspective, the solution had to comply with the Uniform Electronic Transactions Act (UETA), one of the several United States Uniform Acts. Its purpose is to bring into line the differing state laws over such areas as retention of paper records (checks in particular) and the validity of electronic signatures, thereby supporting the validity of electronic contracts as a viable medium of agreement. Thus, this meant the eSignature solution had to be compliant with Standards and Procedures for Electronic Records and Signatures (SPeRS), a set of guidelines, procedures, checklists and strategies for developing systems to create, deliver, sign, manage and transfer legally enforceable electronic records and signatures in commercial and consumer transactions.
Also, from the green perspective, we expect a significant impact on our environmental footprint and a decrease in paper. We don’t tend to justify a project like eSignature based on whether or not it is green, but I do believe it is important to demonstrate to our employees and customers that we are trying to recognize our impact on the environment. It’s a nice side benefit. Most important, we had to create a level playing field with our competitors who were already offering the digital signature capability.
On the technology side, the eSignature solution had to be scalable, support multiple clients with varied needs, support multiple formats, and yet maintain a consistent formal interface. The eSignature solution would be Web service based, and the expectation is that it must have high availability.
investment that is more challenging to justify during a period of uncertainty. We had to spend a lot of time and energy helping the business units understand that if we made the right targeted investments, it would simplify and automate many manual processes. It would make it far easier to respond to future crises, should they happen again.
The eSignature SolutionOne of these vital initiatives was to implement a much-needed digital signature capability into our customer offerings. Building an eSignature solution does not seem particularly complex, until you realize that the system has to be a universal solution that a customer will use to fulfill all of his signature requirements. Like most things worth doing well, the eSignature implementation brought along its challenges.
We looked to HCL to help us build the eSignature solution because we’ve had a long-term, successful relationship with HCL, starting in 1999. Back then, we were looking for a partner to help us deal with the Y2K dilemma and happened upon HCL. We engaged them to do a relatively small piece of the Y2K resolution work, and that project went so well we continued to work together. Since then, our relationship has grown steadily and the eSignature work was a natural partnership. The “black box” eSignature component was built by a third party, and HCL’s role was to help integrate the solution into our environment, make it a Web service to be accessed by other applications, and help with production monitoring.
From a business perspective, the digital signature capability had become table stakes for many distribution opportunities. Within AIG, most of the key technology initiatives, projects and new development are driven from within each of the core business units. Within our business, the project had two key drivers: the ability to automate the front end of the insurance process and the ability to
The financial meltdown reinforced just how crucial information technology is to the continued health of a business.
40 // CIO Straight Talk 41Straight Talking: Dispatches from the Front Lines //
//
// Generating Value Through Innovation
David EvansPosition: Vice President, Information Technology
Company: Quest Diagnostics Incorporated, U.S.
Professional Background: David joined Quest Diagnostics in 2001 as Executive Director, Laboratory Operations Systems, and was named Vice President, Diagnostics Systems and Services, in 2006. He previously served in a variety of management positions at the American Red Cross and spent the early part of his career in technical sales.
Education: Bachelor of Arts, Richard Stockton
College
In addition, because the documents being processed are legally binding and with significant financial implications, a failure or error in the system could have serious consequences.
Early BenefitsAt AIG, we go through a rigorous business case process for everything we do, and we believe this project has a positive net cost benefit. It easily meets our threshold for justifying the work. With anticipated cost savings and the opportunities for increased revenue generation from projects we would otherwise be unable to handle without the eSignature capability, we believe the project has more than justified itself.
Though we are early in the adoption of the application, we already see that we’ve created an environment in which this capability can be reused and leveraged in other situations. For example, today we ask our customer to complete a paper form, and we can’t process a service request until we receive written authorization. This tends to slow up our processes, which inevitably leads to dissatisfied customers. It also impacts the productivity of our distribution partners.
Among the benefits we’ve already identified:
There has been a reduction in policy application • runarounds, which means more satisfied agents and agencies along with better customer experience, which could translate to more business.
We now have a streamlined approval process, a • one-step signing and automatic validation process that eliminates several manual steps.
Though it’s not the only improvement, eSignature is a core element in trying to significantly improve our customers’ experience when they do business with us. Our industry is a very paper-form, regulation-intensive business. The more we can use eSignature technology to make that part of the process easier for our customers and distributors, the better our ability
to successfully win over our customers.
For example, we are planning to use the technology in engaging a new set of distribution partners with a product that we previously hadn’t sold. One of the requirements in their RFP was having the eSignature capability. No discussion about a relationship was even possible without the eSignature system in place. As more and more distribution partners and affinity groups aim to avoid subjecting their customers to all that paper shuffling, the eSignature will be a requirement.
Impact on the CIO and the Information Technology OrganizationThere is no doubt that what AIG has been through as an organization over the past couple of years has reinforced how important technology is to our business. As CIO, I’ve been fortunate that technology has always been viewed as a critical element to the success of this company. Our organization understands and values what technology can do. As we rebuild our business units, one of the challenges we have is to seize the opportunity, to help reinforce how technology can help us do that and, at the same time, even help change how we do some things. Whether it is automating manual processes or modernizing existing systems, the challenge is to continue to demonstrate how crucial technology is to our business.
So I can’t overstate the importance that the IT organization, not just its leader but everyone throughout the organization, understands the business side of the equation. The importance and power of a technologist who understands the business he or she supports couldn’t be higher. We’ve often told our people that their highest value isn’t really in their technical skills, because frankly, we can get those skills from organizations like HCL. But their greatest value is understanding the business and being able to translate a business problem into a technology solution. I believe that very strongly. //
Quest Diagnostics’ CIO created an “Innovation Orchard” designed to generate revenue for IT projects and serve as a model for innovation in the company.
Leading By Example
There are few industries under more intense pressure than health care. Everyone wants the very best care but everyone also rails at the ever-increasing costs of such care. At Quest Diagnostics our goal is to provide high quality services that will improve health outcomes for patients while also minimizing or even lowering the cost of health-care delivery for providers. At the same time, we have to continuously innovate to gain entry to new markets around the world.
As Vice President of Information Technology at Quest Diagnostics, my challenge is to align information technology with our corporate business goals and act as a strategic business partner. And that’s just the beginning. Of course, we must provide the traditional IT products and services in an effective, efficient manner. But today, that’s just table stakes. I have no interest in being just an order taker. There is always pressure to deliver high quality IT, but there is a mandate to go well beyond that. Like other proactive IT leaders, I also have to focus on the company’s top-line growth through innovation and help identify and create competitive advantage.
Quest Diagnostics is the world’s leading provider of diagnostic testing, information and services that patients and doctors need to make better health-care decisions. The company offers the broadest access to
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diagnostic testing services through its network of laboratories and patient service centers, and provides interpretive consultation through its extensive medical and scientific staff. Quest Diagnostics is a pioneer in developing innovative new diagnostic tests and advanced health-care information technology solutions that help improve patient care. Quest Diagnostics had revenues of $7.5 billion in 2009 and has 43,000 employees. Additional company information is available at: www.questdiagnostics.com.
Needless to say, IT is at the heart of what we do. But as we’ve seen in all aspects of our lives, technology is now pervasive in both our personal and professional worlds in ways that seemed unimaginable not that long ago. Our children are experiencing a completely different environment than most of us grew up in, seemingly attached at the wrist to handheld devices that connect them seamlessly to the entire world. As these new generations of consumers become employees and customers, expectations for IT will evolve in dramatic fashion. Being prepared for the unexpected is a requirement for anyone who hopes to succeed in this environment.
In a world like that, companies want a CIO who can provide real leadership and innovation. By that I mean, they are looking to the CIO to produce radical, disruptive, market-based changes to the business that
result in real top-line growth. That same CIO needs to understand the seemingly endless waves of new technology — mobile computing, iPads, social media, search engines — that have an impact on all our lives, especially in the consumer space.
For me, that simply means “stop talking, start doing.” We talk a lot about innovation, but talk is cheap and if we all agree that IT needs to be innovative to spawn growth, then let’s push hard on innovation. The key starting point is a question: What will innovation bring to the organization to
improve the customer experience or spur growth and profitability or cut costs? The CIO who focuses on the ROI question is now a business partner. And that requires the CIO to understand the business thoroughly, identify real business opportunities and understand how those opportunities relate to the corporate strategy.
Rather than make IT a back-office services function with a hand out for funding, I decided to fund some innovations out of my own budget. In so doing, I have the opportunity to energize a number of modest initiatives and get everyone on the team excited about making a difference. I call this the “Innovation Orchard” — an initiative to cultivate new innovations that will help to drive business growth and productivity enhancements — because we can grow these small seeds of ideas into bigger
initiatives over time. We can open a small spigot to provide the necessary nurturing for some good ideas.
The seeds of the Innovation Orchard are produced through a process I call the 5x5 Innovation Approach. I will provide $5,000 over five weeks for an individual or group to bring an idea to the prototype stage in which they’ll have a discussion with a business partner. The goal is to either scale fast or fail fast in terms of identifying and developing a new business-enhancing innovation. And our target is to take on business challenges with these initiatives and open them up to our entire IT team. I am using what is called “crowdsourcing,” meaning we are getting ideas from everyone — executives, lab technicians, IT people — and fertilizing those ideas in our Innovation Orchard.
The idea is to get everyone into the Innovation Orchard and allow them to open a spigot. Among other benefits, this helps bridge the gap between IT and the business side. We’ve solicited ideas from our business partners and asked for challenges from them. I insist that people blog about what they are doing, rate ideas, vote on ideas, and post arguments for and against ideas. This is democratic innovation at its best, and it represents a huge paradigm shift. Thus far, the concept has people fully engaged, and ideas are emerging at a healthy rate.
We’ve gotten several ideas to the pilot stage, and our business partners looked them over and said, “No, thanks.” But that’s fine. That’s what we need, a quick answer — not an ambiguous response that wastes time. We have some big thinkers who want to change the entire world, and we have others who are more about iteration, incremental changes that improve processes and quality.
CIOs must be comfortable in a new world of technology. There is a generational divide, and nothing is a phone call anymore. We don’t always understand how the 20-somethings think. We don’t
text like they do or use Facebook like they do. There are wikis and blogs, and all that has driven technology engagement in a far-flung organization. This represents a vast change for IT. And in that is another challenge. Everyone assumes all this is free; they don’t realize they have given up their freedom and privacy. Google offers tremendous value for them. But I’m a commercial lab so I have to figure out how we learn from that, and it is complicated. How do I deliver flexibility, speed and value free in a field that is highly regulated?
I spend an hour every morning surfing the Internet, reading CIO magazine and other publications about management and marketing. I have taken some risks and pushed the envelope on innovation, and I have to demonstrate that I can lead the change. Nothing gets deployed until I’ve used it. I’m one of the first adopters and every change to the desktop our team makes, I’m the first person to use it. I have to lead by example. //
I call our program the 5x5 Innovation Approach. I will provide $5000 over five weeks for an individual or group to bring an idea to the prototype stage in which they’ll have a discussion with a business partner.
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Integration of vehicle data and systems•
Integration with the industry-leading implementation of • SAP Waste and Recycling
The Solution: Dynamic Job Scheduling Based on Real-Time TrackingIn 2006, Veolia began a relationship with HCL in order to create a solution for its mobile technology needs. To that end, HCL worked with Veolia to develop the Paperless Truck System (PTS).
As part of the PTS system, each truck was outfitted with a custom-designed on-board computer and PDA connected in real time to a fleet/field force management system which, in turn, was connected to the centralized SAP back-end system. The system included:
Fleet/Field Force Management 1. Among the functions: Job Dispatch and Driver Allocation — This facilitates a job order to the truck through a logistics officer who automatically allocates the job and task to a specific driver. GIS/ GPS-based Vehicle Location Tracking — Coordinates are stored for 5-second increments with full real-time mapping integration.
Improved Visibility into Vehicle Maintenance 2. Real-time monitoring of vehicle dynamics and driving details — Vehicles can be carefully monitored via this system, which feeds real-time data from each vehicle including fuel usage, current speed, distance traveled, engine idle time and location. Trip Tracking — Every trip is logged automatically and available for display via history tracking with a media player-style browser interface.
Improved Service Management 3. Signature Capture and Authentication — By allowing a customer signature to be recorded and authenticated electronically on-site, the system helps speed up transactions, increase accuracy and reduce administrative staff input.
Business Benefits: Streamlined Operations and Cost SavingsAs the HCL relationship with Veolia entered its fourth year, the PTS solution had been successfully rolled out across all of Veolia’s waste management operations in Australia. Extensive cost savings, in terms of both labor and time, have been realized and have resulted in significant increases in customer service. In fact, the outcome has been so well received that Veolia businesses in Europe, Asia and the United States are considering implementing the system. HCL also successfully partnered with Veolia to implement a SAP Waste and Recycling software solution, among the first organizations in the world to install this system. //
How do you efficiently manage a nationwide fleet of waste collection trucks in a sluggish economy with astronomical fuel costs?
For Australia’s leading waste management company, the challenge was daunting, especially in a volatile business environment in which technology had become an increasingly important part of the solution. In an industry unaccustomed to depending upon technology, this meant a significant transformation in culture and strategic planning. But this is just what Veolia Environmental Services faced in 2004 as it looked for a blueprint for the future.
The Company: Veolia Environmental Services, Australia This unit of Veolia Environnement S.A. is an industry leader in all facets of resource recovery and waste management in Australia. The company, formerly known as Collex, has spearheaded innovative and sustainable waste management solutions in Australia for more than 30 years. Acquired by the French multinational company, Veolia Environnement, in 1991, the Australian company became part of a $50 billion global water, transport, energy and waste management giant that employs 330,000 people in more than 64 countries. In Australia, Veolia Environmental Services has more than $800 million in revenues with 3,000 employees and more than 52,000 commercial and industrial customers.
The Challenge: Streamlining Its Fleet and Field Force OperationsIn order to maintain its industry leadership position as a sustainable innovator, Veolia sees itself as far more than a provider of waste collection services. But having forged a reputation for reliability and environmental responsibility in every area of solid and liquid waste management and industrial services, in 2004, the company’s executive management realized that Veolia’s business model needed a transformation. One crucial area of focus was the management of its vast fleet of collection vehicles. Being in the waste management business, Veolia Australia maintains a fleet of more than 600 hundred waste collection trucks, some of which are owned and operated by contractors under the Veolia brand and management.
Among its most pressing challenges:
High fleet running costs•
Difficulty in tracking and tracing “assets”•
Slow response to customer requests•
Inefficient logistics operations•
Lack of integration between operational sales and financial • systems
Lack of reliability and difficulty in managing real-time, two-• way communications with a mobile staff
Safety and compliance•
Clearly, these issues crossed all the company’s lines of business, but the key leadership role in addressing the challenge fell to Veolia’s IT team to deliver this critical business-sponsored initiative. In order to proactively attack the problem, a strategic technological solution was required. Veolia needed a comprehensive fleet and field force management system to address the needs of its mobile staff and their vehicles. The CIO needed a system that would dynamically schedule and dispatch jobs, and provide GPS/ GIS-based real-time tracking of trucks. The system would have to offer an interface for functionalities such as performance monitoring, alerts generation, geo fencing, history tracking and dispatch, confirmation of jobs in real time with the back-end system, and high availability in a challenging industrial environment.
Given that Veolia was a market leader and wanted to solidify its position, it had a laundry list of requirements for the new mobile technology.
Among the goals:
Better in-the-field connectivity for its drivers •
Moving from reactive to proactive fleet management•
Improved service management •
Vehicle performance and maintenance automation •
Reduction of the pick-up to payment process cycle time•
Elimination of manual data entry by office staff•
Case Study
Veolia Achieving Fleet and Field-Force Optimization
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//
// Generating Value Through Innovation With the global economic crisis causing severe cuts in government spending, police forces such as Wiltshire have had to find ways to maintain effectiveness with tighter budgets.
Much of the computerization that WPF had introduced over the past few years required officers to spend added time at the station retrieving and depositing information. Everything handled on the street required some kind of back-office function, which meant that police officers had to constantly come back to the police station to update systems. Cumulatively, this added up to countless hours of wasted travel time and time off the street for Wiltshire’s 1,200 police officers, resulting in diminished visibility and effectiveness.
In 2007, Wiltshire police brought in HCL to develop a Mobile and Remote Working Solution (MRWS) and helped implement a plan in which mobile handheld devices would be given out to nearly all of Wiltshire’s officers. Today, 1,000 such devices — mobile PDAs — are out in the field and have transformed a significant part of the police operations in Wiltshire. The implementation cost $3.75 million, with annual productivity gains expected to reach nearly $10 million.
According to an IDC report on the Wiltshire MRWS implementation, key benefits expected include:
Increased policing visibility•
Increased officer productivity of up to 20 percent•
Improved arrest rates•
Reduced workload for contact center staff •
Improved resource deployment. By adding a • GPS component to the mobile devices, Wiltshire police will be able to instantly pinpoint all available resources in the field in real time. This capability facilitates rapid deployment of the most appropriate available resources.
Reduced resource requirements. Elimination of • some back-office processes is likely to result in cost savings that can be redirected to the front line.
The new devices have the potential to be the linchpin for a reorganization of WPF’s way of operating. Officers, for example, may not have to come to the station at all. They could be briefed about their duties on the handheld from home and go straight to their beat.
Before MRWS, for example, an officer called to a domestic abuse incident would deal with the offender but then return to the station to fill out a form and provide details so the police could do a risk assessment for the victim. A form could take an hour to complete, and travel time could add up to more hours off the beat. With the mobile device, an officer can now fill in the form at the crime location with the victim present, and the information is immediately uploaded to WPF’s mainframe system.
The handheld devices also tie directly into the United Kingdom’s Police National Computer (PNC) system, so an officer out on the beat can check somebody directly without using a radio to connect to an operator at the PNC center. Data is transferred back and forth instantly, meaning that arrests can be made more quickly and information shared across a wide network immediately. In an era of increased terrorism, intelligence data can be circulated using this model and prioritized instantly. An intelligence search can be completed accurately on the spot, resulting in much higher arrest rates.
Throughout our mobile device initiative, we're using technology to make the people of Wiltshire feel safe with the available number of officers. //
Reference: Jan Duffy, IDC Government Insights European IT Opportunity Case Study, "Mobile and Remote Working Adopted by Wiltshire Police Force: Improving Police Visibility,” September, 2008
Patrick GeentryPosition: Assistant Chief Constable
Organization: Wiltshire Police is a police force in the southwest of the U.K. covering an area of 3,490 square kilometers, serving a population of more than half a million citizens.
Professional Background: Pat joined the force in July 2009 from Humberside Police and lives in Wiltshire. He is a member of the Chief Officer Group with responsibility for Citizen Focus, Contact Centers, Learning & Development, Professional Standards, Justice and Partnerships. He is also working with Wiltshire and Avon & Somerset officers toward Special Branch and Major Crime Collaboration and chairs the MAPPA Strategic Management Board and the Local Resilience Forum for Wiltshire.
Going Mobile in Wiltshire
After a recent street robbery in Chippenham, a rural community near the city of Bath in southwest England, the Wiltshire police officers who responded to the scene took a different approach to solving the crime. Having been called to the shop where the robbery took place, the officers used a handheld mobile device to take a still photograph of the suspect from the closed-circuit television video that had caught the robbery in progress. The image was sent immediately to the Wiltshire police image database and within minutes was circulated around the local stations and to police on the street, also using handheld computers. Within a couple of hours, the offender was picked up and arrested.
For police forces in the United Kingdom and other parts of the world, technology is changing the way routine police work is handled. The impact, in both economic and crime prevention outcomes, has been dramatic.
Wiltshire Police Force (WPF) is one of 43 police forces in England and Wales. Home to Stonehenge, covering an area of just over 1,250 square miles and with nearly 700,000 inhabitants in dozens of primarily rural communities, Wiltshire is a relatively safe part of the country. But Wiltshire has been under constant pressure to improve its policing processes and enhance its officers’ visibility and effectiveness in the field.
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A program that equipped officers of a rural English police force with handheld devices made the force more effective by unshackling the officers from the computers at headquarters and getting them back onto the street.
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//
// Generating Value By Effective Collaboration and Planning
Rob HornbyPosition: Chief Information Officer
Company: Wealth Management Group, Old Mutual P.L.C.
Professional Background: Rob joined Skandia, the Swedish financial services company in 2007, just after it was acquired by Old Mutual. Before that, he had been at Sky Television, where he was Director of Software Delivery and Support and CRM Program Director. In his career, he was a co-founder of a software business and spent seven years in
consulting.
Education: Bachelor's degree, Master's degree, Aston University, U.K.
Changing Contracts On the Fly
As the outsourcing of information technology has evolved over the past two decades, CIOs have faced myriad challenges in effectively driving those relationships. Outsourcing deals are fraught with potential minefields — from poor communications to unmet expectations. But one common scenario that receives minimal attention, yet keeps many of my fellow CIOs up at night, is the midstream deal course correction. In a field where change is the watchword and technology shifts occur with lightning speed, long-term outsourcing contracts are often obsolete well before the end date is reached.
And that is exactly what happened to me in early 2009. As CIO of Old Mutual Wealth Management in England, I have spent the past 18 months getting a lesson in outsourcing realities in a tumultuous global economy. Having joined Skandia, the Swedish financial services giant in 2007, just after it was acquired by Old Mutual, I inherited a five-year $200 million outsourcing deal with HCL, in which HCL would optimize application development and handle development, maintenance and support. The goal was to create a world-class infrastructure that would make Skandia’s existing business model more competitive. Just a couple of years into the engagement, however, the HCL relationship took a sharp and unexpected turn.
Skandia faced an all-too-common CIO headache: a radical change in the business and a long-term outsourcing agreement ill-suited to the new environment. Flexibility saved the day.
Skandia was an old-line life insurance and pensions business and had been transacting business in the British market in a traditional paper-based manner. But when Skandia merged with a small company named Selestia, everything suddenly changed. Selestia provided financial service portfolios, using an online gateway investment model that was unknown in the British marketplace. Though Selestia represented a tiny part of Skandia’s business, Old Mutual’s leadership decided to make a radical strategic shift. Even though the old-line business was profitable, Skandia would switch to the innovative new online model as its primary route to the market. The belief was that the financial market in Britain was inevitably heading toward this digital landscape and Skandia had the chance to lead the way. It was a risky bet but a potentially lucrative and visionary move.
Two Years to Six MonthsI oversaw a two-year IT transition plan designed to morph our current business model into a radically new one. Plans for an orderly transition were set in motion but, unexpectedly, the transition accelerated like a Formula One racecar, and the two-year window shrank to six months. Skandia’s sales team had embraced the new model, resulting in a sharp decline in sales of its traditional products. All new business was coming in online. The comfort of a two-year transition period was no longer a possibility.
In the meantime, there was that huge HCL outsourcing contract filling the room like an 800-pound gorilla. Having entered the agreement well before the business model shift, the HCL deal reflected none of these changes or the new direction. Suddenly, I was CIO of an online company but we had a technology platform that needed to be scaled and provisioned to handle that task. And we had a strategic outsourcer in HCL that had been contracted to provide a whole range of services that were no longer strategic to our future. In the blink of an eye, we faced a major discontinuity across our
entire business, but IT in particular. We had to move very quickly or we would have damaged our entire strategy.
We immediately began to talk to HCL about transitioning away from what it was doing and creating new capabilities. We made a crossover plan designed to move to a new skill set and focus the engagement away from what we had originally asked the firm to do.
All of this could have been a dreadful mess, but something surprising happened. We had a very traditional and specific contract with HCL. There were certainly provisions for terminating the deal, but there would have very costly penalties, and that is not the option either we or HCL wanted. So when the legal framework of the contract is not of much help, the only thing that can make a difference is the relationship. That is when you really begin to understand what the culture of a strategic supplier means. How are they going to behave when you can’t make them do something but you need them to reinvent the relationship?
Building a New PartnershipWe had no framework for the conversation except that we had a sweeping new business need. It wasn’t so much about HCL’s supplying specific things that we had asked for, but how the two of us could work together to respond to the future. And it was a future for which neither of us was prepared at the time. It clearly changed the nature of the relationship, ultimately in a positive way. But at the time, it was very difficult. HCL had made commitments. It had people with specific skills who were part of our account, but those were no longer skills we needed. People with the skill sets we needed immediately were not available. We actually needed lots of infrastructure support for an online gateway, but the original contract didn’t anticipate that. HCL didn’t have that capability immediately available, so we faced a tough decision.
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We considered terminating the contract. We had our own internal software capability within Old Mutual. It was a small group, but it had the skills we needed. One option was to significantly expand that group. We could have gone to our local contract market and hired needed skills directly into our in-house IT department. But we made a better choice. We did a bit of a joint venture with HCL. We decided to build a team together that could deliver the infrastructure we needed. This would be a cultural joint venture, where we worked together to design an organization that neither of us had at that time but we knew was needed for this task.
We agreed on three key goals:
We needed to focus on creating and sustaining • an online business, and there was no room for downtime. In the past, many of our systems could have outages of several hours, and our customers would never know about it. We had online systems, but they were not transacting in real time. Now, in this new world, all our systems are transacting online in real time, and if we lose them for even 15 minutes, several hundred other businesses that depend on our platform can’t transact business. Our whole culture of urgency around managing and maintaining live systems has had to radically change. We needed HCL to go on that journey with us to a world where five minutes really matter. This is not just about technical skills, it’s about mind-set and urgency and organization and the ability to manage incidents. It underscores the real sense of dependency that the business now has on IT.
We had to use this platform in multiple global • markets. Our investment gateway platform is in Britain, but we have to reuse it in other European markets. The next things we need to draw from HCL are the skills around software platform engineering — because it’s one thing to supply in-house IT for a customer’s internal use but quite
another to create a platform for several hundred other businesses in other geographies. What becomes paramount is the ability to treat the systems like a product, to create a platform that is sufficiently robust to be in use in many different situations at the same time, using a single code set.
We had to maintain our legacy business.• What sometimes gets lost in this mad dash to a new system is that we continue to have a very significant legacy business. We needed HCL to maintain all of our legacy systems to a high standard and to retain motivated staff to do that, without having these employees feel that the world has moved on and that they are irrelevant. We had to do that with our own people as well. Our legacy business is a precious asset that we needed to protect and steward.
Even as I say all this, the transition is still a work in progress. HCL is still in transition, and so are we. It remains our goal that HCL will continue to provide the same volume of service that we originally contracted for, but provide it according to our new needs. So far, we’ve been very close to achieving that, though there is a long way to go.
For example, we expect the investment in our legacy systems, in financial service terms, to exist for many more years. The average life span for a financial application is 17 years. Technology has to last a long time because investments last a long time. We can’t move out of the old world entirely.
Managing Expectations As CIO, I faced another challenge. I had to manage expectations inside the company as well. The first thing I have done is offer complete transparency and honesty about the situation we are in. I’ve never tried to make it look better than it was. My job is to very clearly articulate the risks and challenges we face. The second thing has been to be very creative about the way we’ve responded to this situation. We sought
to be extremely well prepared, to be doing the right things, and to be able to demonstrate to my senior colleagues that this was what we were doing. We made it our business to have all the answers we could. We had to access a wider network to do that.
HCL didn’t have all the answers either, so we have had to work together. I am fascinated by the dependence that we in the IT industry have created by using outsourced partners. All CIOs are aware of that dependence. But we’ve also created an entirely different organizational model about how strategies are implemented. And maybe we haven’t thought as much about that as we should have. It is one thing to get services provided from a lower-cost geography, but it’s another thing to realize that your ability to execute your strategy is entirely dependent on that other party — because you then have to rely not just on their technical ability to do basic delivery but also on their ability to adapt strategically and to move with you. We didn’t look at that very carefully in the selection process. I’m not sure anyone does.
In this post-recession world, companies will be dealing with different strategies than they had before the financial crisis. As macroeconomic conditions change, the ability of partners to think and act strategically with us will be a key factor in whether businesses succeed or fail in the delivery of these new strategies.
I’ve been to lots of IT management seminars, and none ever mentioned that challenge, let alone told me how to do it. We’ve had to learn on the job. I’ve been lucky with HCL. I’ve worked with several other outsourcing partners, and HCL has been the most flexible internally and most willing to work with us to create new things that we hadn’t had before.
But I’ll add that it was not entirely luck. We selected HCL based on our perception of its culture and the chemistry of the relationship. We felt there was something in its culture that was favorable — initiatives like Employees First. Its leaders are trying
to do some radically new things, not just in the world of outsourcing but in the world of business. If you are trying to make a radical reformation of your strategy, a company that is used to working that way itself is of much more value than a company used to doing just transactional delivery.
My TakeawaysI recently sat at a round table with 11 CIO counterparts discussing outsourcing, and not one was fully satisfied with the arrangements that he or she had. But not one would consider going back to before he or she had outsourcing. Major shifts are likely to continue in the financial markets over the next five years, and no one can predict what will happen. We’re confident in general terms that we have proved we can pull off this kind of transition, even though it remains a work in progress. So I’m confident but also cautious. The ecosystem in which our products are delivered to the world today is not a finished model. It works better than the previous model, but we also know it doesn’t work as well as we want it to.
One of important lessons I’ve learned from this experience is that you must have an outsourcing contract that is as much about changing the contract as it is about the services you start with. You need to assess suppliers against a scenario in which most of what you asked them to do would change. There are very few companies that can predict the next five years, and therefore, our contracts can’t pretend that they can predict the future either. You need to think about how your partners would respond, how you would respond, and how the framework would respond. In other words, you need to be treating your outsourced partners as strategic before getting into this kind of situation. You have to have the relationship in place before this happens. It’s very difficult to build a relationship while a crisis is happening. //
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At the time the request for proposal was issued, sales were still rising, but the pace of growth was slowing and market share was on a steep decline. Dixons’ response was to announce a focus on its longer term viability: Offer better service, overhaul its store portfolio, increase online sales and reduce costs. After a review of all business areas in 2006, Dixons formulated a plan designed to achieve cost savings of £30 million a year by streamlining its distribution network, centralizing its business processes and reviewing internal IT support costs and service levels. Wanting to focus internal skills on the retail operations, Dixons decided that outsourcing the IT department would be the most efficient and cost-effective approach.
But Dixons found that the lowest bidder was not in a position to deliver the level of services that it expected. It ultimately selected HCL Technologies based on a number of factors, citing cost, service levels and business alignment as elements that influenced the decision in almost equal measure. At the time that the contract was signed in 2006, the HCL and Dixons outsourcing deal was the ninth largest retail sector outsourcing deal since 2001, and the largest for an Indian outsourcer.
The Engagement: An Evolving Relationship Since 2006, HCL Technologies has been providing systems development, application delivery, infrastructure support and maintenance services to the information systems function of Dixons Retail.
At the start, the Dixons business operating model consisted of many different brands running entirely independently of one another. The group needed business clarity, and so before outsourcing IT, the retailer embarked on a project to centralize human resources, commercial operations and the group’s distribution network. Outsourcing IT support and infrastructure management enabled Dixons to focus on managing the centralization and management required to change the business processes.
The retailer has begun the process of overhauling its services platform onto a single enterprise resource planning system from
The Company: Dixons Retail P.L.C. (previously DSG International P.L.C., or DSGI)Dixons Retail P.L.C. is Europe’s second-largest consumer electronics retailer by revenue, behind Metro Group of Germany. It specializes in selling electronic equipment, personal computers, domestic appliances and other products. The company's stores include Currys, Currys.digital, Dixons, Dixons Travel, PC World and Pixmania. Its most significant presence is in Britain.
The Challenge: A Changing Competitive LandscapeIn 2006, Dixons realized that it needed to become more agile to be able to respond proactively to changing markets. Dixons had achieved many years of market share growth up to 2000, but after the turn of the century, the demand for consumer technology weakened and intense competition drove prices lower. As a market leader, Dixons was seen as a target from which others could take market share. The competitive background also became more complex with the arrival of non-specialists like grocers and pure-play online retailers.
As rivals expanded and offered consumers more choices on price, service and products, Dixons’ market share declined, and its growth in sales slowed. Changes were needed. The company was no longer able to compete on price alone.
The Solution: A New FocusDixons chose to focus on raising the bar in customer service as a way of differentiating itself. Outsourcing information technology and support functions was considered an attractive route to free up valuable staff and operating budget to focus on business development and other core areas.
To find the resources for customer service improvements, Dixons needed to make adjustments to its spending. It began a review of costs across all of its business areas. In retailing, IT is often considered a "necessary evil," so this was seen as a prime area for cost reduction. Having already outsourced call center functions to the British company Capita, Dixons was aware of the potential cost and business benefits of this option.
SAP A.G., the German software giant. This centralization is targeted to streamline Dixon’s application landscape, provide greater flexibility and agility, reduce the cost of IT provisioning, enable greater exploitation of its multichannel offering and through enhanced functionality significantly transform its supply chain, supporting the reduction of distribution centers to two, based in Newark; as well as shrinking its overhead costs and generating savings from inventory reduction.
In 2006, Dixons sold The Link, a mobile handset retailer, decreasing its portfolio by around 350 stores. When Dixons' leadership changed in December 2008, the new CEO embarked on a transformation program intended to improve the company's retail lineup even further. The goal was to ensure that it would be equipped to take on grocers, such as Tesco and Asda, as they expand their consumer electronics offerings; its main rival, Comet; and the American chain Best Buy as it enters the British market. The group’s store restructuring program broadly has two key facets: dispose of underperforming outlets and improve those with a potential for better profits.
All this change was complicated, of course, by the recession, which has caused operating margins to take a steep dive.
The relationship of HCL and Dixons has been marked by great flexibility, beginning with the retailer's decision to embark on the installation of the SAP software system. The plan resulted in a reduced need for development, and the development agreement was renegotiated 18 months into the contract. In addition, as the retailer's circumstances changed, it needed to offshore more staff than was originally intended. As part of the deal with Dixons, HCL initially managed a total of 250 workers, with 65 percent working offshore in India. Today, about 70 percent of the workers are based offshore.
Such adjustments are possible because of flexible contracts and an adaptable pricing model. Unlike standard "time and material" pricing models, which charge against units of worker time, transaction-based pricing takes the quantity of work completed into account. Today, about 70 percent of the contract follows this pricing model.
The Business Benefits: The Value of FlexibilityWith the initial five-year contracts with Dixons having run most of their course, HCL regards the relationship as a notable success, thanks to a number of factors. For starters, it spent a lot of time in coming to understand the client's business and then the two parties jointly devised systems to manage resources and undertook annual planning of key capital and revenue projects.
Both companies were careful to ensure that service-level agreements (SLAs) were effective. This resulted in technical SLAs being tuned to reflect business requirements.
There are important lessons to be learned about the matter of pricing. For starters, price was not the prime driver when Dixons chose its outsourcing partner. Further, flexibility in the pricing model proved critical, enabling the outsourcer to flex the contract according to market or internal strategic changes, using transparent cost models. Rigid contracts invariably lead to problems farther down the line. A flexible pricing model was important in allowing the services (such as staffing requirements) required by Dixons to adapt to the ever-changing retail environment.
Retailers are not looking for just a services supplier. They are also looking to build long-term successful partnerships with service providers who are able to adapt and evolve along with the retail business. The experience for both Dixons and HCL is that circumstances change. To manage changing circumstances, long-term relationships need constant communication, clear expectations and transparency to be successful. //
Reference:Christine Bardwell, Matthew Piner, Ovum, "DSG Outsources to HCL: Case Study," June, 2010. www.hcltech.com/insighthcl/pdf/DSG_Outsources_to_HCL-_Case_Study.pdf
Case Study
Dixons Retail In Search of Agility and Savings
54 // CIO Straight Talk 55Straight Talking: Dispatches from the Front Lines //
// Generating Value By Effective Collaboration and Planning
// Chuck CialiPosition: Chief Information Officer
Company: Teradyne Inc., U.S. is a leading supplier of automated test equipment in a $5 billion marketplace; $1.1 billion in revenues and 3,600 employees in 35 countries.
Professional Background: Chuck has been CIO of Teradyne Inc. since 2005. He joined it in 1998 as Director of Enterprise IT Infrastructure. Earlier, he worked with FTP Software and Digital Equipment Corp. Chuck is an adjunct member of the Computer Science faculty at the University of Vermont.
Education: Bachelor of Science, Rutgers University; Master of Science, University of Vermont
Getting Ahead by Getting Along
When I became Chief Information Officer at Teradyne in 2005, I knew that this was going to be anything but a status quo assignment. I had been at Teradyne since 1998 and when I took on the CIO’s role, I realized quickly that we needed to modernize our legacy application portfolio and, in many ways, reinvent ourselves as an organization. In order to do that, we would need to initiate a transformational outsourcing strategy. The challenge was huge and the stakes were high, but a failure to execute effectively could produce devastating results.
Teradyne had grown exponentially in nearly 50 years in business, but if we wanted to maintain a leadership position, we had to respond swiftly.
Like all technology manufacturing sectors, automated test equipment is a highly competitive and demanding business environment where there is little margin for error. By 2006, we knew that the automated test equipment (ATE) marketplace was changing dramatically, which meant that we had to aggressively reduce IT operating costs. What we faced was immense pressure in the manufacturing sector due to increasingly complex chip technology that required sophisticated testing. At the same time, there was severe market demand to lower the cost of testing and reduce product development cycles. This was a business problem but
When the ATE market changed dramatically in 2006 and we were forced to slash IT operating costs, we knew off-shoring was a given. Until 2005, we had outsourced application development to offshore providers so we understood this environment. Instead of managing a distributed, multi-vendor outsourcing model that would undoubtedly grow more expensive over time, we decided to find one excellent partner and embark on a true multi-service managed services outsourcing deal with a co-sourcing engagement model.
Transform existing legacy applications and 2. underlying infrastructure. To increase our efficiency, we saw the need to provide services delivery from remote locations, and we decided to deploy IT Infrastructure Library [ITIL®] practices to standardize services.
Adopt a relationship-based model to enable 3. objectives. In order to gain buy-in from our various business units and employees, both we and our partner would have to show extreme sensitivity to the IT workforce. Without an element of trust and transparency between us and our partner, this would not happen.
I also knew one other thing: If we gave our partner the ability to participate in additional new application development work, they would have “skin in the game” and thus added incentive to succeed.
When we set out to obtain bids for a partnership, we actually included HCL, the eventual winner,
we were technology driven, and the solutions to our problems would emerge from a savvy technology-based blueprint. I realized that our IT organization needed help to address these pressing demands.
Having spent time teaching computer science at the University of Vermont and participating in many sponsored research projects, I believed there was a teaching opportunity here despite the pressure. Lessons would be learned, one way or the other, and my goal was to find a partner who not only had the skill sets but also the strategic outlook to help us achieve our objectives.
We were looking for the soft skills as well as demonstrable technical capabilities. We had been going offshore since 2000, so this was not new to us. We are a highly cyclical business and we worried that if the market went into a downturn, we could stall. We knew that more than 60 percent of applications were two revisions behind and some critical ones were actually out of support. We believed that if we did this bundled outsourcing strategy and linked our portfolio transformation work to it, we’d get the business side more behind it and it would get baked into a five-year plan.
In looking for the right outsourcing partner that would help us rationalize our enterprise applications, maintain our supporting applications and IT infrastructure, and migrate our data center operations, my team laid out three main objectives:
Achieve cost benefits and productivity 1. enhancements through integrated offshoring.
I knew that if we gave our partner the ability to participate in additional new application development work, they would have “skin in the game” and thus added incentive to succeed.
When Teradyne set out to outsource its entire IT operations, it avoided some common problems by establishing a transparent and trusting relationship with its IT partner before work began.
56 // CIO Straight Talk 57Straight Talking: Dispatches from the Front Lines //
at the last minute. We already had a relationship with HCL in our engineering services business, but hardware and infrastructure services were not part of that relationship. Nonetheless, we decided that HCL would pressure the other bidders to be more price competitive and let us get a better idea of available services across the board.
We had a very high-touch bidding process, and my staff spent more than 50 percent of their time for five months in 2006 on this process. We probably spent more than 80 hours with each of the bidding vendors. When you do that, you get to know the supplier very well. Early on, HCL identified its delivery team, the people we would actually work with, and that provided us a level of comfort. It’s all about the team that is going to come in and work on your account.
I also made a trip to India to meet HCL’s CEO Vineet Nayar. We met in his office and it was just the two of us. Vineet looked at me closely and said, “I really, really want your business, Chuck!” And there’s something to be said for really being wanted.
We liked the fact that HCL embraced the idea of putting skin in the game. Rather than a client-provider deal, we saw this as a true partnership opportunity and we made our choice. We signed a 5-year, $70 million multiservice agreement, and the deal encompassed an effective plan to transform our IT operations.
The partnership focused on three critical areas: Enterprise Applications (including legacy systems), infrastructure services and data center migration.
The engagement included IT consulting, application development, and end-to-end application and IT infrastructure management (including data center, network, security and help desk services).
The HCL team approached our partnership with three key goals:
To achieve cost benefits. By deploying a 1. centralized team across an integrated operations center that was made up of both onshore and offshore members, HCL was able to create
significant savings for the application and infrastructure management outsourcing program. In so doing, HCL “rebadged” about a fifth of our IT personnel.
To transform 2. applications. HCL helped us bring about a series of significant
transformations to the application portfolio by cross-leveraging best practices and leveraging the HCL technical and domain functional experts.
Build better relationships with Teradyne 3. employees. I set up weekly meetings with HCL, my management team and me to ensure visibility of problems and transparency in the process. We addressed sensitive issues, and both organizations embraced the idea of using relationships rather than sticking only to the letter of the contract to resolve problems. We also initiated a detailed employee review and made a point of holding onto employees who were performing to our satisfaction.
For me, the process demonstrated the importance of visibility and vigilance on the CIO’s part in the course of these engagements.
The Results
We are still in the middle of our application transformation, so it is too early to comment on those results. But there have already been dramatic results from the partnership. Among the successes:
We consolidated our two ERP systems into one. • In so doing, we’ve given operations, finance and sales a single, end-to-end view of the customer order status, and we are now able to commit to specific delivery times. It is critical to be able to provide our customers with an accurate delivery date so they can do their own production planning. We’ve achieved greater than 90 percent on-time delivery and taken our lead time from 12 weeks down to six weeks.
We’ve significantly • increased our engineering efficiency and moved our cycle time from really poor, by industry standards, to among the best — from 90 days down to 14 days. Given the cyclical nature of our business, if you miss a market window, that business might not return for 18 months.
In so doing, we removed more than million • dollars in hard staff savings and even more savings in terms of reduced re-work and reduced material risk.
We’ve reduced our engineering slip rate, which is • a measure of hitting product design delivery dates, from 20 percent to nearly zero for more than a year now.
We’ve improved our software engineering • productivity rate by 18 percent through reuse and better utilization of our 500 software engineers.
For me, the process demonstrated the importance of visibility and vigilance on the CIO’s part in the course of these engagements. By maintaining a strong and visible presence, I was able to ensure continuity, minimize the disruption and oversee the inevitable personnel issues that arise with such ventures. Even through rough times, we cemented a trusting and positive environment.
And most important, we agreed beforehand how we would resolve our problems and in so doing, we avoided the bickering and territorial disputes that
inevitably sink so many of these partnerships. Though technology is the foundation of our world, it is people who make the decisions, carry out the assignments and build the bridges to our business units and our customers.
So relationship management is the key to both the short-term and long-term success of a partnership. //
Reference:
Allie Young, Ian Marriott, Gartner Research, “Teradyne’s Outsourcing to HCL Shows How Transparency, Flexibility Deliver Outsourcing Value,” May, 2009. ID No. G00166530
We avoided the bickering and territorial disputes that inevitably sink so many of these partnerships.
58
Virginia GuthriePosition: Chief Information Officer
Company: Dr Pepper Snapple Group
Current Focus: Need
Professional Background:
Need
Education: Need
// CIO Straight Talk 59Straight Talking: Dispatches from the Front Lines //
// Generating Value By Effective Collaboration and Planning
Bruce Carver leads the Cummins global IT organization and is charged with helping the company generate and manage information in a way that drives business growth and profitability. In this interview, he talks about his company's IT blueprint and how it is shaped by — and helps shape — the company's business.
How do you think growth will be redefined as traditional financial measures reflect a social impact? Do you think IT has a role to play in this transition and if so, how?
The answer is yes. I think it's all around the concept of value and social and environmental responsibility. For our customers and our end users, it's really about the value that we add. Our IT team supports our businesses’ Web presence and how the various products and services are presented to our customers, and it performs back-office functions that consume a lot of resources. What I mean specifically by this is that it's really around what is the value that we provide by delivering the right information and IT services at the right time. Our ability to do this impacts the cost algorithm and the profit algorithm and provides efficiency to product development, and the way the company works allows us to be a responsible consumer of environmental resources (primarily our consumption of energy resources).
Bruce CarverPosition: Vice President and Chief Information Officer
Company: Cummins Inc. is a U.S.-headquartered $10 billion corporation that designs, manufactures, distributes and services engines and related technologies.
Professional Background: Before Cummins, Bruce had been VP and CIO at Dana Corp., a tier-one automotive parts supplier, responsible for global information technology programs. He has also served at PepsiCo as VP and division CIO for the PepsiCo Beverages and Foods Division.
Education: Bachelor of Science in Finance, Virginia Polytechnic Institute; Master’s Degree in Human Resources and Organizational Development, DePaul University
In Conversation with Bruce Carver
Creating the IT Blueprint
The way we look at the IT blueprint is pretty simple. It's really around determining the value that IT brings to the business. And within that value, what are the core operating principles and priorities that IT delivers. We look at IT as a percentage of the company’s revenue. We track the value that we get from the IT expenditure. That is one way of looking at how we start to construct the blueprint. The next step is to identify the enabling services and how those services are orientated in delivering a program that supports the core businesses. Once our business partners determine their needs from a go-to-market standpoint, the next logical step is to identify how IT supports that go-to-market strategy within a fixed algorithm, while ensuring that we add value and efficiency to the business. The entire process takes us about nine to 12 months to draw up our five-year blueprint, which we call our strategic initiative plan. We work with our business partners to map out their key business opportunities and how IT will support them. We then continue to work on that five-year plan proactively and update it as the market evolves.
Though we still don’t know if it is actually real or just concept, cloud computing and virtualization are definitely a trend to watch for. We are determining how we would leverage these technologies as we have started looking at the IT architecture supporting our businesses. There is a potential for cloud computing and overall virtualization to really make a big impact on our business by adding more flexibility to the organization and our IT cost structure.
In line with that would be the second trend around making desktop devices smaller and leaner. Leveraging virtualization as well as enterprise computing from a centralized standpoint and adding less cost at the desktop level should be the focus. In the consumer space, when we look at the desktop, I am anticipating that the market will start moving to devices that can actually save a lot of expense through investing in smaller and less complex devices because your back end is much more complex and much more robust.
The third trend is the virtualization of where people work. This is the whole idea of virtual teams and how these teams do their work from multiple, disparate locations. IT suppliers who support our application development and back office (support desk and data center operations) are typically remote to our core business locations. These teams collaborate virtually across time zones. As a multinational organization,
Do you have a blueprint for IT? How do you define it and measure it?
What are the top trends that you are seeking to implement in your organization that would define the next blueprint for your IT?
//
60
Virginia GuthriePosition: Chief Information Officer
Company: Dr Pepper Snapple Group
Current Focus: Need
Professional Background:
Need
Education: Need
// CIO Straight Talk
//
61Straight Talking: Dispatches from the Front Lines //
we have many touch points, and those people in most cases will never sit in the same room with one another. So, worrying about how you have solutions that allow these teams to collaborate efficiently and still produce a product that is usable and defect free is very important.
No. 1 would be the customer. We do business because we have customers. Everything we do is to support our customers, acquire more customers and keep the existing ones happy.
No. 2 is value. What's the value that we get for the investment compared with the business value?
From the value stems the third essential, which is establishing the cost drivers to produce effective solutions as well as the cost drivers that we’re positively impacting.
And fourth would be around what's the overall business impact, which is really the role of the three prior items.
In the shared services group, the fifth would be around what's the efficiency that we get from processes and output.
The next would be the organizational and professional growth of our IT team.
And the role about the first six is really around what's the overall IT environment that we have created.
We look for partners with a strategic focus and the ability to execute. They have to do more than the traditional development and create robust tested solutions at a reasonable price. The one thing that is important in creating those partnerships is showing that the partners work in the same way that our core teams do around the world, because we cannot have our partners work in a different way than we do. Then, it's really about showing that the partner’s chemistry is aligned with our corporate culture and that everybody is working on the same strategic plan and the same operational structure. //
What were the essentials you had in mind when you created your blueprint for IT?
All high-growth companies are investing strategically in IT and gaining competitive advantage through collaboration and value-centric relationships. What is your organization’s competitive advantage, and what kinds of relationships and/or partnerships are you building?
// Generating Value By Effective Collaboration and Planning
Four former CIOs offer advice on making the internal business case for transformative IT investments.
Here’s a typical strategic problem CIOs have to contend with: A generation is coming of age that has never dealt with salespeople. They are used to conducting transactions with their mobile devices, laptops and desktops. They text and hardly use the voice “feature” of their phones. And yet, they — like everybody else — want to have a great customer experience. They want to feel valued. What do CIOs need to do to understand these customers and fulfill their needs?
But wait a minute. These customers, who want to use their phones to scan a RSS barcode to get information or make a purchase or comparison shop, coexist with customers that like to be sold, face-to-face, in a store, by a real, live person. And, while one of your newer customers might be comfortable with an online transaction that costs the company, say, $.25, another type of customer from another demographic group only trusts a call that costs the company $8. At the same time, yet another type of customer requires a real, live encounter with a representative on the sales floor that costs even more. All of these transactions must be supported with IT. All of these transactions have different price points, different costs and different levels of complexity.
How do you manage these differences? By cost of sales or by value of sales? By brand value or by repeat business? By a particular type of customer experience you are trying to provide? And, how do you make
CIOs @ HCL:
How to Pitch Your Transformation Plan
// Kris HillstrandFormer CIO, TXU
Satish ChandrasekaranFormer Vice President/Technology, Target (India)
Greg BlackFormer CIO, American Safety Insurance
Raymond SiebertFormer CAO/CIO, Acceptance Insurance
//
//
//
62 // CIO Straight Talk 63Straight Talking: Dispatches from the Front Lines //
sure the right customer gets the right type of service?
How do you transform your IT to support your organization’s aims in a practical way — and convince the CFO and other senior management that the investment needed to achieve this transformation is justified?
Straight Talk posed questions like these to four former CIOs/IT executives, who are now with HCL: Kris Hillstrand, former SVP/Operations, TXU Energy, and CIO, Energy Future Holdings; Satish Chandrasekaran, a former Vice President of Technology for India at retailer Target Corporation; and Greg Black and Raymond Siebert, former CIOs in the insurance industry. Their answers were candid and forthright.
A first step, according to Kris Hillstrand, is “creating metrics and dedicating yourself to measuring everything that’s relevant.” Measurement is not exactly action, but an intense dedication to measurement helps CIOs make their case when it comes to developing a strategic direction and getting the organization to invest in it. “Measurement helps CIOs define the business case,” says Hillstrand.
Defining the Business CaseDefining the business case is critical because one of the CIO’s newer roles is to translate IT issues into business terms, and vice versa. This is particularly important, even critical, when CIOs are invited to sit at the strategy table, which is often presided over by the CEO. Since many business leaders are not well versed with regard to technology issues, the CIO must put those issues into concepts they understand. Even
more difficult for the CIO, many business leaders are skeptical when the discussion turns to technology. Why the skepticism? In many cases they earned it, by supporting programs that failed to deliver benefits to the organization, or fell short of their goals. For those reasons, the CIO must translate how IT can support business goals.
The aim of technology is not — and never has been — simply to upgrade an organization’s IT. Technology is simply a force that enables other things to happen. Those other things are activities related directly to the business — increasing revenue, decreasing costs, connecting employees to each other, to their clients and customers, improving the customer interface, integrating suppliers, and so on.
All this sounds simple enough until you realize that in almost every instance, the technology outside the organization is ahead of, or driving, the technology inside the organization.
Because the list of business issues that IT must address, enable and support is long and changing, the CIO needs to have a place at that strategy table so that the organization remains capable of adapting to change. As a consequence, everything the CIO wants to do, that requires investment and executive support, needs to be developed as a business case. “To get a project kicked off and supported,” says Hillstrand, “you have to make the business case, which includes the benefits case.” Doing that is one of the reasons why measurement matters, on a cost/benefit, net present value basis. With the business case comes the need for credible milestones.
To get a project kicked off and supported, you have to make the business case, which includes the benefits case.
terms and of educating their non-IT peers develop support for their ideas and plans, and — even more importantly —develop trust.
Preparing the ground by continuously educating peers — instead of simply seeking support for a particular program during the annual planning and budgeting process — is one way a CIO can develop support for his or her ideas and plans. It’s also a way of ensuring that the CIO will be invited to sit at the strategy table.
How Much of a Visionary? Being a visionary, even in a conservative organization, is looked at positively, if people understand that your aim “is to give your company a sustainable business advantage,” says Satish Chandrasekaran, head of Retail and Global Application Development Delivery at HCL. “The desired structure,” says Chandrasekaran, is not just to have the CIO part of the strategy-making process, but to have him or her “as a member of the capital allocation committee. To do that, the CIO must understand return on capital, opportunity cost, sunk cost and everything else that’s needed to make good financial investments.” CIOs must also understand an organization’s internal competition for capital, and be able to weigh the relative merits of each request for investment.
But there is yet one more item, according to Chandrasekaran, and it’s where trust comes in. “For CIOs, the name of the game is risk mitigation.” Not only do people have to understand why an investment in technology makes sense and why it makes sense now, they also must understand their level of exposure if it goes wrong and whether the CIO can fix it if a problem occurs.
Of course, in almost every instance, the antidote to risk is trust, which is based on developing a reputation for competence, something CIOs must cultivate inside their organizations. To do that, “people have to understand you run a tight
A Leg on Two HorsesAs the organization’s chief translator of IT issues into business terms, the CIO must take trends that are emerging and put them into a business context. Inside the organization, the CIO needs to be one of a small group of people with a very long-term strategic horizon. He or she also has to be adept, when it comes to timeframes, of having a leg on two horses — one that’s long-term and capabilities driven, the other that requires quarterly progress reports and updates. It’s not always easy to ride these two horses at once.
Whereas 20-something consumers can go into stores on a whim on a Saturday and purchase smartphones without going to an investment committee meeting, and then demand as a group that those smartphones be supported, the CIO has far less freedom to act. To support those consumers, the CIO often needs to get one committee or another to give its okay, which takes time and requires making a case. But how do CIOs make that case efficiently and quickly so their efforts enhance, rather than impede, the aims of the business? How do they do it so their organization doesn’t lose revenue or profit each time a customer or supplier blinks?
They do it by keeping their peers educated.
Making the CaseCIOs need to “build support in the organizations, which requires selling their ideas, something they’re not always comfortable doing,” says Raymond Siebert, Principal, HCL Insurance Practice. “CIOs need to develop advocates throughout the organizations for what they do and who support their strategic business vision.”
But doing that, according to Siebert, means making the case not in the CIO’s terms, but in terms other executives understand. If people inside the organization realize that the CIO is there to support their objectives, they will become advocates. CIOs who are capable of translating IT into business
64 // CIO Straight Talk
organization with real metrics and meaningful measurements. That helps them when they weigh the risks against the costs,” says HCL’s Hillstrand.
Support for PlansBeing known for business acumen and running a tight organization is extremely important for CIOs who wish to develop support for their plans, particularly their long-term plans. But what’s also important, Hillstrand says, is being known as someone who “gets things done fast.” That’s important because too often IT projects take longer than planned.
Planning horizons are important too. CIOs need to “articulate a strategic vision, and they need to do it in a business context, but they need to keep it practical,” says HCL’s Greg Black, a principal at HCL America,.
“You have to build the organization’s IT capabilities for the future, but not too far out into the future. What we can do always happens faster than what we should do. On the other hand, you can’t be bound by tradition,” Black says.
The best way to find the right distance out into the future is by getting external views, which includes global views to help you understand how things are done elsewhere in the world.
Selling a Vision to PeersWrapping a strategic vision in a business case is the minimum requirement a CIO needs to sit at the strategy table. But it’s also important how you sell it to your peers so they support you and remain your advocates.
“What I always say is that if you say to people, ‘what I’m talking about is five years ahead. Get on board,’ it’s insanity. They won’t do it. It’s too far out,” says HCL’s Siebert. What you have to do is present your case for practical transformation in stages.
“Swiss-cheese it,” says Siebert. “By that I mean,
present your plan in chunks. Rather than looking out five years, give them two- or three-year chunks,” he says.
But making a case is more than setting out a timeline that’s comfortable. “You also need to get proof. You need more than one or two people supporting your ideas. You can’t just be a futurist. You need to show your peers that where you’re taking them other people are going too.”
According to Siebert, one powerful way to make the case is to “use case studies to build confidence. Show your peers that you’re not some pioneer out there all alone. Make them understand that other organizations, other industries, have done what you’re proposing to do. And that they succeeded. There’s a lot of power in making the case that way,” he says.
Translating, educating and building trust are vital for making the case. But in the end, the CIO has to adopt one more role if he or she wants a seat at the strategy table, that of leader. “Leadership, now, is an extremely important quality for the CIO. If CIOs are helping to create an organization’s strategy for the future, they have to make people want to follow them,” says Chandrasekaran. //
Ambitious IT initiatives that can transform the business – typically the most difficult to sell internally, are only one element of a CIO’s project portfolio. Even today, after years of squeezing costs out of IT and making business processes more efficient, relatively modest investments may yield a dramatic reduction in costs and increase in operational efficiency. For a catalog of such initiatives, see the Appendix “15 Questions: A checklist of things to consider as you begin your annual IT planning” (page 76).
Solution SpotlightThis and the following section
represent a detour from the rest of
the issue, which primarily features the
voices and perspectives of CIOs and
other IT professionals. In this section,
we look at two areas of current
interest — mobile computing and
cloud computing — and offer thinking
from HCL on these topics. In the next
section, “What Lies Ahead?,” we offer
the views of three outside observers of
IT on the future of the CIO role.
67
Using the iPad To Boost Sales Productivity
27th Jan 2010: The world waits with bated breath to witness Steve Jobs unveil the much anticipated Apple tablet computer at the Yerba Buena Center in San Francisco. Meanwhile, far away in a suburb of Delhi, a team of 10 engineers is busy conceptualizing a sales productivity enhancement tool for the iPad — though as of yet, none of them has seen the about-to-be-unveiled device.
Today, their idea has materialized as an interactive order management and tracking system that runs on the iPad platform. Move over, bulky laptops or tiny tablets: This is feature rich, portable and highly interactive. It is simple to use and aesthetically pleasing, with a paper-like feel and with interactive features that can take the pain out of order management for sales representatives.
The integrated functionalities cluster around predefined task flows and information reusability for recurring scenarios, context-sensitive display, advanced search, and dynamic analytical capabilities. The platform is currently being piloted across two micro-verticals.
Incubation of ideas like this is the hallmark of HCL’s “Employees First, Customers Second” philosophy, which drives responsibility for product innovation, customer solutions, and organizational change down in the organization. (See “Employees First, Customers Second,” Harvard Business Press, 2010.) For a demonstration model of the sales tool, write to [email protected].
66 // CIO Straight Talk Solution Spotlight //
Everyone has his or her head in the clouds these days. And that can make it difficult to know where
you are — or, rather, where you should be headed.
Cloud computing has cast a shadow over the corporate landscape in the past several years, sparking
as much confusion as genuine interest. But despite the buzzword-de-jour feel of the topic, most
people now agree that cloud computing is more than just a new IT delivery model and instead
represents a sweeping transformation of IT. For CIOs, it can be a significant career enhancer, enabling
them to drastically decrease costs and improve IT services for their organizations.
But for that to happen, CIOs need to understand how cloud computing is changing their business
and their role. They need to be able to choose among clearly defined cloud options — and just as
important, explain the pros and cons of each to the CFO and the CEO. A systematic approach to
defining and assessing the options can make navigating the world of clouds clearer.
Surveying the Cloudscape: Not All Clouds Are Alike
For all the interest — and investments made — in cloud computing, no one has really pinned down a
single definition of this rapidly evolving space.
In general, everyone agrees that cloud computing delivers elastic IT resources — elastic in that they’re
easily scalable, both up and down, to meet fluctuating business demands — as a service, via Internet
technologies and available on a variety of devices, including laptops, desktops and mobile phones.
The customer is typically billed on a subscription or pay-per-use basis, with relatively few contract
obligations or entry and exit fees.
This offers enormous potential benefits. Cloud computing, with its on-demand resources, pay-as-
you go pricing, and rapid scalability, should make IT provisioning faster, more efficient, and more
cost-effective than most enterprise networks are capable of, even through stand-alone partnerships.
Cloud computing allows companies, using browser-based user interfaces, to increase capacity or add
capabilities on the fly without any CAPEX on new hardware assets or software licenses, and without
having to invest in new employee skill sets.
Cloud FPO to developing your
A systematic approach
Strategy
68 // CIO Straight Talk 69Solution Spotlight //
For now, of course, most companies will
continue to run many applications on traditional
on-premises, non-cloud infrastructure —
especially legacy applications tightly coupled with
existing hardware.
It’s important to note that, whichever of these
options — or mix of options — that you deploy,
the end-user experience won’t change. The same
services are delivered in the same way to internal
customers across the organization, whether HR,
Finance, or Sales and Marketing. In the case
of the three cloud options, users probably will
consume the services as metered IT resources
flowing through a central “pipe,” unaware of the
type of cloud where those services originated.
people or groups in the organization to
be internally billed for the service.
This consolidation of IT resources across
numerous servers or other hardware is a key
differentiator between the internal private cloud
and conventional company IT systems.
In conventional IT, the excess capacity of a
single server may go unused. In the case of an
internal private cloud, it is pooled with the excess
capacity available on other servers elsewhere in
the organization. This allows everyone throughout
the organization to tap into available IT resources
on a server that, in the past, people outside a
particular function didn’t have access to.
Internal private clouds are appealing to many
companies because they mitigate the security
concerns around public clouds. Because the
company owns all of the equipment powering the
cloud environment (often a very large data center),
it has complete control over the IT resources as
well as the data and is responsible for securing it.
This comes at a cost: the significant expense of
acquiring and maintaining the cloud infrastructure.
But companies often fail to accurately assess
this cost. While it’s certainly always worth
looking at public cloud options in the market,
there is value in also looking inward, at your
company’s previous investments in software and
infrastructure. A service provider such as HCL
can help its customers assess whether current IT
assets are underutilized and could serve as part of
a private cloud.
Private Cloud (External). A third option combines
the benefits — but also shares the drawbacks
— of public clouds and internal private clouds.
In this approach, an external provider hosts your
company’s cloud environment on the provider’s
infrastructure— but infrastructure that isn’t shared
with other customers of the provider, as in the
case of the public cloud.
Security concerns are lower than on a shared
platform, and you eliminate the expense of
creating and maintaining the cloud infrastructure
for an internal private cloud. But you also lack
control to manage the infrastructure as you see fit.
cloud. Many companies will adopt a hybrid
strategy based on a mix of these, along with
continued use of their legacy, non-cloud
IT systems.
Public Cloud. This is the most widely adopted
type of cloud as well as the most thoroughly
understood — it’s what most people think of when
they think of cloud computing. In a public cloud,
a service provider — for example, Microsoft,
Amazon Web Services or Google Apps Engine —
makes IT resources available to any customer via
the Internet. Those resources range from e-mail,
CRM and payroll applications to storage capacity
to server compute cycles. Specific examples are
Cisco's WebEx meeting space and Salesforce.
com's CRM SaaS cloud.
Private Cloud (Internal). With this type of cloud,
enterprise IT resources are consolidated, so
users across the company can have self-service
access to those resources, which can be easily
scaled up or down. Automation enables the
speedy, on-demand provisioning of resources,
such as applications and infrastructure. The use
of IT resources is typically metered, which allows
However, for most enterprise organizations, these
benefits come with certain risks: a lack of control
over the resources in the cloud; possible breaches
in the security of confidential data; and issues
around data governance and interoperability.
But these risks vary depending on the type
of cloud.
We talk about “the cloud,” as if it were some
ubiquitous nonterrestrial IT environment.
But there isn’t just one cloud up there in the
troposphere; there are many, offered by a
variety of cloud computing technology and
service providers.
And these big clouds run by external providers
aren’t the only kind of cloud there is. In fact, one
type can actually take shape within the walls of
your organization.
Generally speaking, there are three types of cloud
deployment models available today — public
cloud, external private cloud and internal private
Figure 1
As companies try to determine which elements of their IT landscape (applications, workloads, environments) are good candidates for migrating to the cloud, as well as which cloud operating model will deliver business value, they should consider various factors in each of four areas.
Organization Application Platforms Infastructure
Business Imperatives Business Criticality Traditional/Next Generation Network Bandwidth
Organizational Structure Demand Elasticity Technology Complexity Storage Requirements
Readiness for Change Complexity Environment (Test/Dev) Server Computing
People and Skills Stability & Performance Manageability Connectivity
Process Maturity Interfaces & Integrations Database Security
Tools, Vendors, Partners Regulatory/Compliance Interoperability Client Computing
Risk & Compliance Data Sensitivity Support Coverage Backup & Disaster
Recovery/Business
Continuity
68 // CIO Straight Talk
Figure 2
HCL’s experience in cloud computing and its long-time work in the area of virtualization provides the basis for a schematic that indicates where various elements of a company’s IT landscape would typically sit along a continuum that runs from traditional, on-premises IT systems on one end to a public cloud environment on the other.
Messaging & Collaboration
Productivity Apps
HCM, CRM, Learning Mgmt
Web Apps
Development Environments
Test Environments
POC/Lab Infrastructure
Archiving
Transient/Unpredictable
Workloads
Storage & Backup
Infrastructure Apps
Enterprise Apps
Data-Sensitive Apps
Apps Tightly Coupled with
Hardware
Mainframes
Legacy Apps
On Premises*
Internal Private Cloud
External Private Cloud
Public Cloud
*Industry-specific/application-specific SaaS has to be dealt with separately for each industry.
70 // CIO Straight Talk 71Solution Spotlight //
in which the cloud environment is stable
and the focus is on effectively managing
operations. Ensuring guaranteed uptime and
zero disruption can be challenging, given
that workloads and performance targets are
often split among multiple service providers.
The company also determines whether
additional applications could migrate to a
cloud environment and whether the mix
between public and private clouds needs to
be modified because of different IT needs
and priorities.
Evolve. 5. As the enterprise moves through
complete cloud life cycles, it can assess
the effect on workload and on different
applications and environments. It moves
toward more extensive adoption, including
migrating true business applications and
processes to the cloud. The business benefits
and ROI of cloud investments are quantified.
Most companies are understandably still at the
stage in which they assess their readiness to
migrate elements of their operations to the cloud,
determine which of those elements are the initial
candidates for migration, and target which types
of clouds they should migrate to.
Developing Your Cloud Strategy
The process of developing and adopting a cloud
computing strategy occurs in several stages:
Explore.1. A company evaluates cloud
computing as part of its overall IT strategy,
assessing applications, workloads and
environments to gauge their cloud readiness;
decides on the appropriate deployment mix
between public and private clouds; designs
a target operating model; and prepares the
business case for cloud adoption.
Experiment. 2. An enterprise identifies
easily realizable cloud opportunities — “low-
hanging fruit” — that can make the business
case for cloud migration more appealing.
Proof of concept and experiments are run
to validate cloud technology and help
engender confidence among the business
and IT teams.
Adopt.3. The company begins implementing its
cloud strategy, by creating an internal private
cloud, migrating existing applications to an
external private cloud or a public cloud, or by
building new applications on public clouds.
Run. 4. The company moves toward a run state
“What exactly is the ‘cloud?’ And what are we doing about it?”
Helping Your CFO Make Sense of Cloud Computing
One of the biggest challenges cloud computing
presents to an IT professional is explaining to
non-IT senior executives both the cloud concept
and the array of options available in developing
a cloud strategy. The poster inserted into this
issue of CIO Straight Talk is meant to be a usable
tool for conversations prompted by questions
such as these.
Labeled “Envisioning Our Cloud Strategy,” the poster represents the sort of explanatory sketch you
might draw at a whiteboard in talking to non-IT executives and helping them understand your cloud
options. It includes four areas that the company should consider in determining whether an element of
its IT landscape is a good candidate for migration to a cloud and, if so, to what kind of cloud.
And it includes a spectrum of cloud options indicating where certain elements typically fall.
Representations of sticky notes suggest that a useful discussion can develop around where, in the case
of your company, those elements should fall.
If the poster is missing from your copy of CIO Straight Talk, go to:
www.unstructure.org/straighttalk/cloudstrategyposter to download a poster.
In making decisions about which applications
are ready to move to a cloud environment, and
which kind, a company needs to consider four
variables: the application itself, the platforms on
which it runs, the infrastructure it currently utilizes,
and the nature of the company’s own business
organization and requirements. (See Figure 1 for
a list of some factors to consider in each of these
four areas.)
HCL recently worked with a client, one
of the world’s largest product development
organizations, to help it through this process
and begin developing a cloud strategy. After an
unsatisfactory experience with a consultant that
failed to see the technology implications for the
company of migration to a cloud, the company
sought out HCL. Using a proprietary migration
assessment tool, HCL evaluated 300 applications
that the company was considering moving to the
Microsoft Azure cloud platform. It categorized
the applications based on their suitability for
Azure and on how difficult it would be to move
them there. As a result, the company was able in
several weeks to pilot two applications on Azure,
providing valuable information about the migration
of additional applications.
HCL has developed a model that helps a
company make an initial assessment about which
type of cloud or mix of cloud environments it
should consider. Based on assessments in the
four areas shown in Figure 1, it establishes ranges
within which various elements of a company’s IT
landscape should sit along a continuum that runs
from traditional on-premises IT to public cloud
computing. (See Figure 2.) It can help companies
with an initial assessment of what the mix of
their cloud computing strategy is likely to be —
although an application or other IT element may
migrate along the continuum, as circumstances
and a company’s needs change.
Both the individual assessment criteria and
the general placement of applications on the
continuum can help IT executives explain the
options to others in the company. It may not help
them get their heads above the clouds, but it can
provide the clarity of vision needed to navigate
inside them. //
Tool Area of Focus
CRI, CEF, Migration++
Cloud Readiness Index, Cloud Evaluation Framework, Migration Assessment FrameworkAutomated, scoring-based frameworks for evaluating a company’s cloud options: the pros and cons of different cloud platforms, the readiness of software applications to move to the cloud, the cost of adopting cloud technology, the effectiveness of migrations efforts
MTaaS™ — Managed Tools as a Service
Cloud Management SolutionIntegrated set of tools delivering application monitoring, infrastructure monitoring, infrastructure management, provisioning and service management capabilities. It is based on HCL’s IT Service Assurance Framework, in alignment with the standard ITIL® V3 framework of operations management
Nimbo™ Private Cloud Enablement Platform and Cloud Gateway for Hybrid CloudCloud enablement and orchestration platform that incorporates core modules (capacity planning, load balancing, network and resource management, disaster recovery) which govern, in an automated fashion, critical cloud computing delivery parameters: SLA, high availability, elasticity, security and self-service
Agora™ Service Delivery Platform for Subscription-Based ServicesA comprehensive platform covering customer onboarding, subscription management, service catalog, multi-tenancy management, billing, metering and chargeback
Cirrus™ Tooling Platform for End-to-End Azure ManagementAzure performance monitoring, storage management, data migration and porting, data integration, deployment, provisioning and release management for Azure, Microsoft’s cloud platform
Innovation in Cloud Computing at HCLHCL has made significant investments in proprietary tools and
frameworks for helping companies develop a cloud computing
strategy. These include:
73What Lies Ahead? //
Three Outside Perspectives on Tomorrow’s CIO
What Lies Ahead?
Much of this issue features the thinking of CIOs about current problems they face and solutions they have devised to address those problems in a way that benefits the business. Their insights are based on firsthand experience down in the trenches.
We wanted to close the issue with the perspectives of three nonpractitioners able to offer a broad view of the changing CIO’s world, but from different viewpoints: seasoned journalist, academic researcher and industry analyst. These observers are:
Maryfran Johnson, Editor-in-Chief of CIO magazine and events, a unique dual role directing editorial content for CIO’s print publication as well as conference agenda development, speaker recruitment and related editorial functions for the magazine’s events. A frequent media commentator on the IT industry, she previously was Editor in Chief of IDG's Computerworld magazine and Founding Editor of CIO Decisions magazine.
Jeanne W. Ross, Director and Principal Research Scientist at the MIT Sloan School’s Center for Information Systems Research, where she lectures, conducts research and directs executive education courses on IT management practices. Her research examines organizational and performance implications of enterprise initiatives related to enterprise architecture, IT governance, outsourcing and business agility.
Ellen Kitzis, until recently a Group Vice President and member of the CIO Research Team at Gartner. Her 24 years of experience in the IT industry include time not only as an analyst, researcher and consultant but also as a practitioner — she is a former VP for Strategy, Service, and E-business at Compaq. She also is the co-author, with Marianne Broadbent, of "The New CIO Leader" (Harvard Business Press, 2005).
You might call these short essays, summaries of interviews with the three women,
“straight talk” from the outside.
CIOs live in a world of paradoxes that are only going to become more difficult to manage.
On the one hand, CIOs are hired as strategists, but on the other, they must spend most of their time on operational issues. They are considered stewards of risk management and cost
containment, but they are expected to innovate. They run one of the most critical functions in a business, but they must constantly prove their value. They are often accountable for project success, but business units have project ownership. Their organization is viewed as a service provider, but they are told they need to be a business driver. The list goes on.
There’s another set of challenges: In my view, CIOs have been given two scarlet letters. In Nathaniel Hawthorne’s novel, "The Scarlet Letter," Hester Prynne was forced to wear a letter “A” that marked her as an adultress. CIOs are defined by not one but by two burdensome A’s: alignment and accelerate. Everything the CIO does — everything, they are told — must be aligned with the business. CIOs hear this constantly. And whatever they do, it must be constantly accelerating, the business changes must happen ever faster. The problem with these scarlet letters: Though the terms alignment and acceleration are commonplace, no one really knows exactly what they mean, if you think about it. So CIOs are judged by standards that haven’t been adequately defined.
There are other growing challenges. Though CIOs are being asked to conserve their investments
Managing the CIO ParadoxMaryfran Johnson Editor-in-Chief, CIO Magazine
in existing technologies, they live in a world where everything around them is changing ever more rapidly. Smartphones, Android systems, cloud computing, embedded devices, new security concerns, social media — all of these were nearly impossible to anticipate and even more difficult respond to.
Or take consumerization — something of a new term that means the influence of social media and other things happening outside of the organization on a company’s technology. This kind of boundary blurring will have a big impact on business, and CIOs will have to adapt to the changes. Yet not all the technology shifts coming from the outside will take root. Many of those that receive publicity and large investments — think MySpace and Second Life — will make a big splash and then recede from view.
While dealing with such challenges, many CIOs are being given additional responsibilities. Because of their experience managing outsourcing contracts and relationships, negotiated agreements, and infrastructure investments, they are being asked to play a lead role in a variety of initiatives. In one of our magazine’s recent surveys, 64 percent of CIOs said they now have significant non-CIO responsibilities.
The job of being CIO was never easy. But it typically involved periods of slow change punctuated by rapid advances. In the past, there were safe moves CIOs could make.
No longer. The CIO’s plate is full and growing even more so. The question becomes not “How should I manage IT?” but “How should I manage the paradoxes and the new responsibilities I face?” A tough job is only going to get tougher. //
74 // CIO Straight Talk 75What Lies Ahead? //
Although the corporate IT function will surely play an important role in tomorrow’s business organization, it isn’t clear what that role will be.
As companies increasingly digitize their operations and their products and services, will IT’s job involve identifying and implementing the
best technology for a new business process or product offering? Or will it involve designing that process or product? Research I’m currently involved in looks at these questions.
It will come as no surprise to a CIO that we’re finding IT may actually be better positioned than business to design a new business process. Why? IT often has a far better understanding of a process — whether existing or proposed — than people on the business side, because IT people see the entire process from end to end and thus can wrap their minds around the whole thing.
For example, many manufacturing companies have focused on improving their order-to-cash process. This requires streamlining activities — and the handoffs between activities — starting with a customer order, continuing through delivery of the product or service, then billing for that product or service, and finally recording payment. These activities cross functional areas such as sales, finance and distribution. In most cases, people in any given function have a limited view of the activities in other functions.
IT professionals also bring process knowledge to situations that can benefit from reuse of process
The IT Function's Uncertain FutureJeanne W. RossDirector and Principal Research Scientist at the MIT Sloan School's Center for Information Systems Research
components. For example, in financial services, the mechanics of opening an account are repeated across multiple product offerings. Because IT people have often delivered applications supporting the account-opening process, they can take the lead in identifying opportunities to reuse the process for a new product.
As for products, in a digital economy a growing number of offerings are digital. Because IT people know the technology, they can be instrumental in the design of the product itself. This ability to take the lead in both business process and product design means that, after years of attempting to align IT with business strategy, IT more often shapes business strategy.
At the same time, we’re finding that, while in some companies or industries a CIO may take the initiative to lead the business process design, in others CIOs resist being pulled in. Even CIOs with considerable clout in their companies will argue that the business side should be pressured to learn how the underlying technology can be leveraged. They believe that IT needs to focus on delivering and supporting the technology, that a partnership in which IT leads technology innovation and business leads product and process innovation provides a powerful combination.
One final point: Note that a business process and the technology behind it are separate but interdependent. For example, take a company that wants to improve its competitive intelligence gathering and analysis. Business people, with well-developed analysis skills, may lead the way, pushing IT to come up with the technology needed to collect raw data. Or IT people could lead the way, creating a system that generates data the business people aren’t yet able to effectively use.
But IT can’t get too far ahead of its business counterparts. Whatever the potential value of a cutting-edge technology, it won’t be realized if the business doesn’t have the capabilities to take advantage of the output it generates. And, as every CIO knows, business people hate spending money on an IT project that can’t show a positive return on investment — even if that failure rests with business folks. //
they work in an airline, they think really hard about how to use IT to lower ticket prices because they understand that’s the key to their company’s health. If they work in mining, they really pay a lot of attention about how to use IT to increase the speed of ore extraction. Their goal is to fully embed IT in the business model, and to do that they need to build teams and create levers that trigger the growth in the enterprise. These transformative CIOs don’t fuss about lowering costs by 2 percent or 3 percent. They want to optimize the organization as a whole.
In my experience, transformative CIOs are the ones who really understand where the organization is going. And while others are waiting for a seat at the strategy table, these CIOs already have it.
In many ways, transformative CIOs are the mirror image of the CEO. They understand that they need to have a vision, same as the CEO, that they need to build teams with the right mix of talent, same as the CEO. They understand this means they have to have people with a variety of functions on their team, like finance and marketing. They also understand they must think across the entire organization and that to get things done inside an organization they need to get people on board beyond their own group. Transformative CIOs are also capable of dealing with multiple work streams, like the CEO. When I was at Gartner, we called these “Type A” CIOs.
But in the end, CIOs are part of their organization and its culture. If it’s a risk-averse culture, that’s the type of CIO who will succeed, however much a transformational perspective might benefit the business. If it’s an innovative culture, that’s the type of CIO who will make it. In the end, it takes a village to define a CIO. //
In the short term future, CIOs have to contend with what everyone else is contending with – reduced spending due to the economic slowdown, which has not yet abated in many areas of the world. But while reduced spending impacts other parts of the organization, it’s particularly difficult
for CIOs, who can’t just wind down programs or curtail projects. You can’t just start and stop an IT initiative. Once you set down a certain path, you have to complete it. But the fact is, CIOs will have to deal with this situation until the environment changes, and one way CIOs will be doing that will be by investing in smaller projects.
In the longer term, the best CIOs will resume their transformational roles. I characterize CIOs by what I call my 30-60-10 rule. Thirty percent of CIOs are transformative; 60 percent are capable, operationally oriented; and 10 percent don’t have a clue.
But let’s talk about the 30 percent of CIOs who are transformative. These CIOs are the ones the CEOs brag about when talking about how the company leapfrogged the competition. And they’re going to be even more crucial to business success in the future — at least in businesses where their talents are understood and appreciated.
I always can tell this type of CIO within the first few minutes of meeting them. They talk business, they don’t talk technology. They talk about what IT can do to transform the customer experience. If
The Role of the Transformative CIOEllen KitzisFormer Group Vice President, Gartner Co-author, "The New CIO Leader"
76 // CIO Straight Talk 77Appendix //
Appendix:15 QuestionsA checklist of things to consider as you begin your annual IT planning
15 QuestionsA checklist of things to consider as you begin your annual IT planning
Every CIO knows the challenge of trying to meet three different goals when considering investments and initiatives for the coming year: 1) reduce IT costs, 2) improve operational efficiencies and, most ambitiously, 3) leverage IT to create new business capabilities — capabilities that may ultimately transform the entire business. (See "How To Pitch Your Transformation Plan," p.61.)
But before you think transformation, be sure you have extracted the most from your existing IT systems. After all, the monetary benefits of reducing costs and improving IT efficiency can help you fund your big transformation initiatives.
So it makes sense to begin the annual planning and budgeting process by asking yourself these 15 questions. They will help you identify relatively modest initiatives that will not only reduce your costs but have a positive impact on the business.
Putting the Questions in ContextIt is important to understand the implications of
“less is more” in the context of your organization’s IT costs. Recall that IT accounts for only 3 to 4 percent of your organization’s revenues. Thus, IT cost cutting simply for the sake of cost cutting is a bad idea; it won’t have much of an impact on the bottom line, while it risks undermining what firms around the globe increasingly see as the source of sustainable competitive advantage.
Indiscriminately slashing IT costs can be devastating and can even result in an operational collapse — which would be tragic, given the modest impact of such cost saving on the overall business.
Instead, through intelligent and informed consolidation, rationalization and optimization of IT investments, you can achieve significant benefits
while at the same time reducing costs — benefits such as improved efficiency and productivity, lower risk, better operational visibility and enhanced customer satisfaction.
The cost savings achievable through such initiatives can be estimated in advance, by breaking down IT costs into six buckets and determining the percentage of overall IT costs that each of these buckets represents. Although the percentages will vary from industry to industry and company to company, a typical breakdown might be:
Construction & Testing – 23%
Architecture & Design – 3%
Applications & Infrastructure Provisioning – 13%
Outsourcing – 10%
Application Operations & Support – 35%
Infrastructure Operations – 16%
Total – 100%
(Source: HCL research wing)
We’ll use this breakdown in calculating the cost benefits of the first 11 initiatives described below.
Most of the 15 questions — and the initiatives that follow from them — are designed to reduce costs in one or more areas of the IT cost buckets. Those costs may be mandatory ("run-the-business costs") or discretionary ("change-the-business costs"). The last four questions involve the reduction of business costs — that is, non-IT operating expenses.
The initiatives are drawn from what HCL calls the “CIO Cost-Out Kit.” For each one described here, we list the HCL “idea owner” of the initiative.
78 // CIO Straight Talk 79Appendix //
Can I make my production support more 1. business-aligned?
Initiative Optimize Your Production Support by Target
Operating Model
Cost Bucket Application Operations & Support
Applicability If your firm has decentralized application
development teams or seeks a service line-based,
business-driven approach to production support.
What It
Involves
Transforming your production support to a
service line-based, business-driven approach for
customer management in a shared services model.
This is done by adopting industry best practices
and a framework for delivering high quality IT
services that are measurable, proactive, predictable,
repeatable and cost effective.
Benefits Improved first call resolution•
Reduced mean time-to-repair/resolution•
Increased resolution within service levels and •
reduced recurring incidents
Cost benefits: an estimated 20 percent of cost •
savings over the original expense is achievable
in the near-term and up to 40 percent over
a period of time with the maturity of the
operating model.
HCL Idea
Owners
VV Apparao ([email protected]);
CS Muralidhar ([email protected])
How can I improve IT response time for critical 2. business transactions?
Initiative Consolidate your IT Operations (Integrated
Operations and Management Center)
Cost Bucket Infra-Operations; Application Operations &
Support
Applicability If your firm has disaggregated IT support teams
in multiple service centers across applications and
infrastructure, geographies. Also, if your firm has
inconsistent IT support processes and tools.
What It
Involves
Simultaneous improvement of IT response time
by monitoring response time of a critical business
transaction and drilling down to the application
and its infrastructure components. Forming a
common team for the first level of support for the
application and its infrastructure.
Benefits Lessened downtime for operations; increased •
speed of resolution
Reduced risk; increased real-time monitoring •
capability
Cost savings: an estimated 15 percent of •
cost savings over the original expense base
is achievable in the near term and up to 30
percent over a period of time with the maturity
of the target operating model.
HCL Idea
Owner
Mohit Mathur ([email protected])
How can I build error-free operation into 3. my systems?
Initiative Instill “First-Time-Right” IT Management
Philosophy
Cost Bucket Infra-Operations; Application Operations &
Support
Applicability If your firm has decentralized service line teams
providing application support across various
business domains.
What It
Involves
Addressing cost, problem-resolution times and
customer satisfaction through close process
conformity, knowledge management tools that
capture IT process and business knowledge,
improved tech staff productivity and proactive
defect prevention.
Benefits Early error avoidance in the life cycle; preventive •
maintenance of both applications and
infrastructure
Proper production fencing that improves •
integrity of the IT system
Reduced cost of operations by eliminating •
incidents and redirecting IT workforce to
prevent rather than cure; improved customer
satisfaction due to customer-centric approach
toward service delivery
HCL Idea
Owner
Ramalakshmanan Subbiah Pillai
Should I rethink my outsourcing strategy?4.
Initiative Optimize Your Outsourcing Mix
Cost Bucket Outsourcing
Applicability If your firm contracts services through higher
on-site, higher-cost location teams, and if your
firm has had low job rotation or has not mapped
services with roles and experience, resulting in
increased cost per service over time.
What It
Involves
Reorganizing your onsite-offshore mix and
resource skill set across outsourced services
requires a scientific assessment of your complete
service portfolio to identify services that are
deployed from onsite, higher-cost locations with
a suboptimal resource mix. After identifying
potential areas of improvement, define a roadmap
to leverage low-cost sourcing locations and a
role-deskilling technique to arrive at an optimized
resource mix that will deliver the same level and
quality of service as had been available before.
Benefits Increased budget predictability as you •
move from a time-and-material model to a
fixed-price model
Increased service specialization will get the right •
people for the right jobs
Better overall quality of available software by •
using best practices
Services are rationalized and consolidated, based •
on commonality and delivery through a shared-
services model.
HCL Idea
Owners
Dharmender Kapoor ([email protected]);
Rupak Rathore ([email protected])
Can I optimize performance of legacy systems to 5. lower total cost of operations (TCO)?
Initiative Optimize Performance of Legacy Mainframe
Applications
Cost Bucket Applications & Infra-Provisioning; Applications
Operations & Support; Infra-Operations
Applicability If your firm has core legacy applications
running on IBM mainframes with MVS, OS390
and z/OS operating systems and is incurring
workload licensing charges (WLC) for IBM
mainframe hardware and software. Also, if
your firm faces challenges with user experience,
maintainability, batch windows, response time or
technology obsolescence.
What It
Involves
Legacy system runtime parameters, job
parameters, scheduling, the nature of various
interfaces and jobs, file parameters and access,
storage access and database queries/access paths
— all warrant significant optimization. These and
other runtime characteristics that determine the
cost/performance drivers such as CPU utilization,
I/O delays, high elapsed time1 and more also
have a direct impact on optimizing performance.
Leveraging HCL’s proprietary framework for
Workload Rationalization helps in deferring CPU
upgrades, improving online response time and
delivering an application that performs to service-
level agreements (SLAs) while minimizing the
application’s running costs.
Benefits Reduced total cost of operations (TCO) via •
savings from reduced operational costs and
associated licensing charges
Reduced technology risk and improved •
maintainability
Enhanced asset longevity through technology •
enhancement and renewal
Optimized performance•
SLA improvements; enhanced customer •
satisfaction through optimized performance;
increased SLA compliance and higher levels of
user confidence
1Elapsed time is the total time taken to execute a task. This takes into account not only the CPU processing time but also time spent in waiting for I/O (disk IO or network IO). Since I/O operations, such as reading files from disk, are performed by the OS, these operations may involve noticeable amount of time in waiting for I/O subsystems to complete their operations. This waiting time will be included in the elapsed time, but not CPU time. Hence CPU time is usually less than the elapsed time.
80 // CIO Straight Talk 81Appendix //
How can I bring predictability into my operations 6. both in terms of cost and service quality?
Initiative Deploy Managed Application Services
Cost Bucket Construction & Testing; Outsourcing;
Applications Operations & Support
Applicability If your IT organization has one or more of
the following:
Significant portion of application services •
outsourced in staff augmentation mode
Inadequate formal SLAs and key •
performance indicators (KPIs) and/or SLA
compliance process
The wish to move from a “capacity-based” •
sourcing model to an “outcome-based”
sourcing model
A need for continuous improvement during an •
outsourced engagement journey
High costs for quality•
Budget overruns; not getting enough “bang for •
the buck”
What It
Involves
“Managed services” can be defined generically
as a vendor’s running one or more services for
a customer in such a way that the vendor is
responsible for meeting the agreed outcome
(measured as SLAs and KPIs) for a fixed price.
Certain components of managed services (typically
in the application development scenario) may
be variable in nature and may be priced using an
hourly rate card. The service is managed by the
vendor proactively, with minimal management
overhead for the customer. The service may deal
with applications or infrastructure, or both.
Benefits Can achieve predictable service levels at •
foreseeable cost for application support
Customer gains access to best-of-breed tools at a •
reduced cost
Frees up management bandwidth so the •
company can focus on its core business
Gains in quality, innovation and continuous •
improvement through a process approach
HCL Idea
Owner
Mukund Garg ([email protected])
How can I make my application development 7. process more efficient?
Initiative Assemble an Application Development Factory
Cost Bucket Architecture & Design; Construction & Testing
Applicability If your firm has low application development
productivity, with major spending on software
development projects; also, if application
development projects suffer from cost and
schedule overruns by 50 percent or more.
What It
Involves
The development factory divides the software
development cycle into a requirements
department, design department, construction
department and testing department at an
organizational level. The concept implies that a
piece of development work passes through the
assembly line from one department to another.
The work in these departments is managed by
the individual department managers, and the
employees in each are skilled at performing the
tasks required by their respective departments.
The entry and exit criteria are well defined for
every piece of work to be serviced by
a department.
Benefits Better application quality, with each •
process component managed by the right-
skilled employees
Increased predictability of outcome, with a •
uniform set of tools, processes and standards
applied across the development cycle
Reduced time to market; minimized risk of cost •
and schedule overruns; enhanced productivity
and quality for application development
HCL Idea
Owners
Annie Abraham ([email protected]);
Sandya Gopal ([email protected])
Do I need to rethink my application portfolio?8.
Initiative Rationalize an Application Portfolio
Cost Bucket Application Operations and Support
Applicability If your organization has large and opaque
application portfolios; also, if you believe you
can decommission at least 20 percent of your
applications and yet support business effectively,
or if you have acquired duplicate systems as a
result of mergers and acquisitions (M&As).
What It
Involves
A structured enterprise application management
methodology, Application Portfolio Optimization
(APO) does away with a piecemeal approach
toward application maintenance by providing
a comprehensive assessment of the health and
utility of all applications. The recommendations
and decisions might vary: technology migration,
application consolidation, retirement,
enhancement, modernization or outsourcing.
Benefits Better visibility and application quality •
as a result of continuous application
health assessment
Cost reduction through optimized •
resource utilization, lower license fees,
lower cost of platforms
Productivity improvements through •
standardization, modernization
and consolidation
Lower operational risk and higher stability•
HCL Idea
Owners
Arup Vithal ([email protected]);
Neeraj Kaushlendra ([email protected])
How can I better govern my IT projects? 9.
Initiative Prioritize using Project Portfolio Management
(PPM)
Cost Bucket Construction and Testing; Applications and
Infrastructure Provisioning
Applicability If your organization has invested in multiple, large
and complex projects and you are experiencing
delays, budget overruns and resource crunches.
Also, if you are looking for processes to
synchronize demand with capacity to make the
best possible use of budget and resources.
What It
Involves
A tools-enabled IT governance mechanism
that gives business and IT decision makers the
ability to align their resource investments and
initiatives with business goals by doing an in-
depth assessment of projects and products based
on factors such as business utility, return on
investment (ROI), business impact, costs, etc. Key
techniques include:
Setting up a knowledge repository of demand •
evaluation and project execution methods
Assessing change requests to minimize ad •
hoc requirements
Realigning existing processes to agree with •
best practices
Benefits Achieve positive ROI in year 1; recoup more •
than 5 percent of annual IT budget after year
1; overall reduced project delays save at least 10
percent of project budget.
Improved annual average of project timelines; •
reduced IT management time spent on
reporting project status
HCL Idea
Owner
Samir Kapoor ([email protected])
82 // CIO Straight Talk 83Appendix //
How can I improve the scalability of 10. testing platforms?
Initiative Set Up a Test Factory
Cost Bucket Construction and Testing; Application Operations
& Support; Architecture and Design
Applicability If your IT organization has cost of quality (cost
of review, inspection, testing and any rework) in
excess of 11 percent of your total IT spending; if
your organization lacks visibility into testing tools
and licenses usage that runs in zero-error-tolerance
mode because the operations are critical.
What It
Involves
A scalable, on-demand service platform that
provides a one-stop shop for testing services. The
services are launched using a target operating
model and are governed by detailed workflows
on service initiation, transition, onboarding and
implementation. The services are also tracked and
monitored through a program dashboard. Some of
the techniques deployed are:
Analyzing root cause and incidence mapped to •
the test life cycle
Maximizing automation of regression and •
enhancing test coverage
Increasing test case reusability and effective use •
of test tools and frameworks
De-skilling resources and standardizing the •
communications framework
Upgrading and rationalizing testing tools •
cost-effectively
Benefits Accelerated testing as a result of segregating the •
lines of services across all testing types of the IT
organization
Testing-cycle time reduced by 10 to 15 percent •
through process standardization and reuse
Increased team utilization through effective •
demand management
Lower cost of quality•
HCL Idea
Owner
Manas Chakraborty
Do I need to review my approach to 11. data management?
Initiative Reduce Enterprise Data Management Cost
Cost Bucket Application & Infra-Provisioning; Application
Operations & Support; Infra-Operations;
Architecture & Design
Applicability If your firm has large, diverse and disparate IT
landscapes, or if you are seeking to optimize your
systems to attain a holistic view of the data. Also if
your firm has grown inorganically through mergers
and acquisitions (M&A's).
What It
Involves
Assesses enterprisewide data management costs
across the various components of the data life cycle
— acquisition, data storage, data management
patterns, data delivery and archiving. The
key techniques to drive cost savings consist of
implementing or adopting:
An enterprise view of the data•
Data as a service (DaaS) by means of service-•
oriented architecture (SOA), data virtualization
Best-in-class master data management solutions•
Storage management practices based on •
information life-cycle management (ILM)
Governance, risk and compliance (GRC) •
frameworks for data privacy and security
A holistic and business-centric view of •
data management
Benefits Reduced costs of managing data and better •
visibility into enterprisewide data
A common understanding of data between •
business and IT helps expedite application
development and ease maintenance
Consistency in use of data results in improved •
operational and regulatory compliance
Common data models facilitate enterprise •
integration and support SOA and business
process management (BPM)
HCL Idea
Owners
Jayashree Govindarajan ([email protected]);
Kandasamy Ramanujam
Rajesh Agrawal Ramesh ([email protected])
What opportunities are there for 12. process improvement?
Initiative Deploy "Pathfinder" Business Process Maps
Applicability If your firm is implementing business process
re-engineering, seeking business-IT alignment or
undergoing M&A’s or restructurings.
What It
Involves
Pathfinder is a cross-referenced catalog of industry-
specific business processes, including associated
measurement parameters, best practices, industry
trends and operational benchmarks. Built from
our experience of working with Fortune 500
clients, it is deployed to provide holistic visibility
and remedial recommendations to the CIO /
COO on information workflows of the enterprise.
Benefits An understanding of business processes •
helps expedite deployment of a business
process reengineering initiative and improves
documentation of business processes
HCL Idea
Owners
Jayashree Govindarajan ([email protected]);
Deepti Mittal ([email protected])
How can I better manage content across 13. the enterprise?
Initiative Consolidate Enterprise Content Management
(ECM)
Applicability If your organization incurs licensing costs
on different ECM product suites across the
organization; if your business is driven by a unified
content view from various content sources, or
guided by adherence to regulatory compliance and
document standards (such as pharmaceutical,
for example).
What It
Involves
The Enterprise Content Consolidation (ECC)
framework with well-defined processes and tools
helps consolidate unstructured content into a
single enterprisewide repository. Some of the key
techniques are:
Identify and analyze content touch points •
within the enterprise
Design a unified content architecture with •
optimized platform license usage
Content platform rationalization – MS •
SharePoint, open source, if applicable
Benefits Cost: depending on the engagement area, •
complexity of business processes and the
existing content management landscape,
benefits can range from 3 to 7 percent savings
on the applicable cost base for the first year, and
between 20 to 30 percent in two to three years,
based on the total budget outlay for ECM.
Increased business volumes through •
reduction in cycle times and instant access to
the right content
Reduced business risk through adherence to •
records-management norms
HCL Idea
Owner
Deepak Mehta ([email protected])
84 // CIO Straight Talk
How do I keep tabs on my procurement 14. spending?
Initiative Outsource the Indirect Material Spending
Management Process
Applicability If your organization has a global presence and
decentralized sourcing functions; also, if you need
visibility into spending for strategic initiatives or
want to deliver value through strategic sourcing.
What It
Involves
An extract, transform and load (ETL) tool enables
extraction of all spending data from internal
and external business functions. The data items
are then automatically cleansed, classified and
deduplicated through a Web-enabled spending
analysis tool and also classified according to
globally accepted standards such as the United
Nations Standard Products and Services Code
(UNSPSC) and Standard Industrial Classifications
(SIC). Based on queries, reports are generated
at the end-user level and shipped to vendors,
preferred suppliers and procurement divisions to
gain visibility into their spending.
Benefits 7 percent assured savings on the indirect •
materials procurement process
Ability to view accurate spending information •
at the aggregate and line-item level
Ability to rapidly identify time-sensitive •
savings opportunities
Enhanced capability for financial and business •
reporting and analysis
Duplicate suppliers can be removed•
Excess stocks can be cut; inventory costs can be •
lowered and expediting costs reduced
HCL Idea
Owner
Srivathsan Sridharan
Is there room for improvement in my 15. printing infrastructure?
Initiative Use Managed Print Services
Applicability If your organization is a medium to large
organization with heterogeneous printing
infrastructure and output environment; also, if
you have an aging fleet of printing devices with
little visibility into the cost of hardware, software
and supplies.
What It
Involves
HCL Xerox Managed Print Services (MPS)
provides a fully integrated enterprise print
strategy with managed services consistent with the
customer’s desktop environment. MPS captures
user requirements and reconfigures the client’s
printer, copier, fax and scanning infrastructure to
be more efficient and cost effective. The output
environment is optimized for accelerated problem
resolution and measurable service improvements.
Generally, the hardware is either owned by
the external service providers or leased from a
financing company in the name of the customer.
The customer usually pays a monthly or quarterly
fee, based on a cost per page or cost per seat,
which is agreed upon when negotiating
the contract.
Benefits Utility-based pricing using a per-click or per-•
seat model
Savings on capital expenditures, since the •
hardware infrastructure is either leased out or
taken over by the service provider
Reduction in power, paper and consumables•
Savings on maintenance (total support and •
maintenance provided by the third party)
HCL Idea
Owners
Vandit Dixit ([email protected]);
Sidharth Mukherjee ([email protected])